An Account Executive compensation plan that pays the same commission rate on all deals closed, regardless of quota attainment.
Single Rate Commission
A single rate commission plan, also called a flat rate commission plan or a fixed rate commission plan, pays set, non-changing sales commission rates on all deals. Unlike multiple rate commission plans, the commission rate doesn’t increase or decrease based on quota attainment, different products, longer contract terms, or any other variable. This is the most simple commission plan that salespeople may have.
$140K
On-Target Earnings
$175K
Quarterly Quota
$70K:$70K
Base:Variable
5x
Quota:OTE
Model your plan
Forecast Earnings
Split
50:50
Quarterly Quota Commission
$1-$30 million
ARR
Quota:OTE
A Quota to OTE Ratio of 4 - 8 is best.
Quarterly
Paths
Path 1: Quarterly Quota Commission
Path Description
Quota
Type
Earnings Rule
This plan only has one path: Single Rate Commission. As dictated, this path will pay the same rate on all deals regardless of quota attainment, product, contract length, etc.
I want the simplest plan there is. This one is very easy to understand, and you won’t spend hours analyzing it or trying to game it. This plan could be a great starting point for a lot of people.
- Lori Richardson, Score More Sales
Women Sales Pros
Plan Examples
Account Executive
Monthly quota:
$33,000 ARR
0-100% quota:
10% base rate
100% and above:
10% rate
IT Sales Rep
Quarterly quota:
$100,000 ARR
0-100% quota:
6% base rate
100% and above:
6% rate
Insurance Rep
Monthly resale quota:
$20,000
0-100% quota:
15% base rate
100% and above:
15% rate
How to customize this plan
As with most compensation plans, the two major components that will vary across sales teams are:
Quota
First, you need to decide the quota period. This is the frequency at which a rep is held to that sales quota.
The most common quota periods are: quarterly (45% of plans), annual (25% of plans), and monthly (25% of plans) with 5% of plans having other frequencies (weekly, bi-weekly, semi-annually, etc.).
Once you decide that, you will need to determine a quota that is both low enough to be attainable and high enough to be valuable for your business. One way to do this is by using our Quota:OTE Ratio Calculator.
Commission Rate
Next, you’ll set your commission rate.
This plan features a single rate commission plan which is very simple to calculate for yourself. You would simply take the total variable compensation the rep is set to earn if they hit their target (for example, $60,000/year) and divide that number by their annualized quota/target from above (for example, $720,000/year).
Given those two examples, that would be $60,000/$720,000 = .0833 or 8.33% commission.
Frequently Asked Questions
Why would I use a single rate commission?
Single rate commission plans are the simplest variable compensation plan out there. It’s for that reason that around 10% of all compensation plans follow this rule. The math is simple to calculate and since reps easily understand their compensation plans, they focus on closing deals rather than wasting time thinking about how to maximize their compensation.
How to find commission rate:
No one got into sales because they love math… fortunately the math here is very simple. You take the variable compensation that a rep earns for hitting their target (say $50k a year) and divide that number by their target (say $500k a year). So it would be $50k/$500k which would give you .10 or 10% commission. Easy enough, right?
Is single rate commission the right comp plan for me?
It certainly might be! If you’re looking to start out with a simple comp plan that gets the job done, you’re in the right place. It also allows you to add complexity to the plan via accelerators, bonuses, or SPIFs later on if you desire.
Should I include accelerators?
That’s up to you. Accelerators are a double-edged sword. While they can reward overperformance (good) they also add complexity to your compensation plan (bad). Around 80% of compensation plans include some sort of accelerator or decelerator, so you’d be in good company. However, it’s up to you if you want to add another layer to your sales commission plans.
What if I have multiple products?
Then this specific plan isn’t for you, but it might be close! If you want to offer a single rate commission for multiple products, you would simply want a plan with more than one single rate commission path. Calculating the commission rate for each of those paths is easy.Simply decide how much of a rep’s total variable compensation you want to dedicate to a product and then divide that number by how much you want your rep to sell of that product.
