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An Account Executive compensation plan that pays a single milestone bonus once a rep hits quota.

Account Executive

Milestone Bonus

Use this commission structure to encourage quota consistency and maintain low financial risk. Milestone bonuses apply only when the rep meets certain stipulations. In this case, it would mean the rep earns their milestone bonus when achieving quota. No more. No less. This can encourage reps to strive for quota every month. Plus, from an organizational lens, this type of sales commission structure removes the risk of an inflated commissions because the maximum bonus payout is a set amount. Note: At QuotaPath, we typically try to avoid plans that only feature milestone bonuses. These types of plans often lead to sandbagging, because if a rep unlocks their milestone bonus this month they might purposely push the next deal to the following month in order to get ahead on that milestone. We recommend pairing a milestone bonus with an accelerator. For this type of comp plan, try the Account Excutive: Commission with Accelerators and Milestone Bonus.

$140K

On-Target Earnings

$175K

Quarterly Quota

$70K:$70K

Base:Variable

5x

Quota:OTE

Model your plan
Forecast Earnings

Split

50:50

Quarterly Quota Bonus

$1-$30 million

ARR

Quota:OTE

A Quota to OTE Ratio of 4 - 8 is best.

Quarterly

Paths

Path 1: Quarterly Quota Bonus

Path Description

Quota

$175,000 ARR quarterly

Type

Milestones

Earnings Rule

100% = $17,500

This plan only has one path: Milestone Quota Bonus. Within this path, the rep does not earn a milestone bonus (a pre-determined dollar amount), until the rep hits monthly quota. If the rep brings in deals within the quota period after hitting quota, they are not eligible for additional bonuses until the quota period resets.

Plan Examples

Sample Account Executive
Account Executive

Monthly quota:

$25,000 ARR

0-99% quota:

No bonus pay

100% quota and above:

flat $2,000 bonus
Sample IT Sales Rep
IT Sales Rep

Monthly quota:

$33,000 ARR

0-99% quota:

No bonus pay

100% quota and above:

flat $4,000 bonus
Sample Insurance Rep
Insurance Rep

Monthly resale quota:

$20,000

0-99% quota:

No bonus pay

100% quota and above:

flat $2,500 bonus

How to customize this plan

As with most compensation plans, the two major components that will vary across sales teams are:

Quota

To set the quota for your sales team, you should first decide on the quota period or length. This determines when, and how frequently, the quota resets for your reps.

We found more companies follow quarterly quotas when compared to those with annual or monthly quotas.

Once you’ve chosen a quota length, use our Quota:OTE Ratio calculator to define your quota amount.

Bonus Rate

Determining the bonus rate for milestone bonus is simple. Take the total variable compensation for your reps and divide it by the number of quota periods you have throughout the year.

For example, if your reps have a $40k variable component to their on-target earnings (OTE) and a quarterly quota, you would divide $40k by 4 (there are 4 quarters in a year). Therefore the milestone bonus would be $10k/quarter.

Frequently Asked Questions

The major reason to have your compensation plan be exclusively 1 milestone bonus is if you have a specific bar that you’re trying to have your reps hit. You don’t care about them overachieving. The only thing that matters is that they hit their quota every month/quarter/year. If that is the case for you, a milestone bonus could be fitting.

Milestone bonuses are typically paired with a commission path in order to encourage reps to hit some certain target. If you include a milestone bonus with your commission rate, this removes some of the concern of sandbagging and rep dissatisfaction.

In sales compensation, a milestone bonus is earned when the rep meets designated stipulations and is paid a set amount. These bonuses do not vary if the rep is below or above these requirements. Meaning, anything less than the quota, and the rep earns nothing. And, for any deals that come in after hitting the quota target within the quota period, the rep would not earn any additional bonuses.

The difference between commissions and bonuses is that bonuses are based on a set amount of money you earn for doing a specific task. Commissions, on the other hand, are a percentage of a revenue number you earn for closing a deal. For example, If a rep gets 20% of every deal closed, that’s commission. If a rep collects $200 for every deal they close, that’s a bonus.

This commission plan’s complexity (or lackthereof) is right up there with the Single Rate Commission plan. The milestone bonus and single rate commission plans both include flat amounts or commission rates. Some would argue the milestone bonus plan is even simpler because the rep can only earn a set amount if and only when they hit quota. In both cases, the math is simple to calculate and easy for reps to understand.

smiling team

Manage compensation & track commissions with QuotaPath

Deliver visibility, automation, and seamlessness across the entire compensation process.

Compensation Hub provides RevOps, Finance, and Sales teams with a free sales compensation plan modeling tool to design meaningful comp plans in a few steps. Built by QuotaPath, a sales compensation and commission software, Compensation Hub includes sales compensation plan examples (including AE and SDR comp plans), a library of commission structure templates, and variable compensation recommendations and use cases for each plan. Each commission plan or bonus structure features adjustable variables so that leaders can create plans aligned with their business goals and historical numbers. These variables include on-target earnings (OTE), annualized quota, average contract value (ACV), annual recurring revenue (ARR), quota frequency, and more. Once a plan is ready, leaders can easily share it within their organizations and save it to see it automated in QuotaPath's free commission tracking software. For additional comp management support, and to learn how QuotaPath is helping teams everywhere bring visibility and accuracy to sales comp, book time with their team for a custom demo.

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