An Account Executive compensation plan that pays the same bonus rate in dollars per-attainment point achieved regardless of quota attainment.
This bonus format mirrors the Single Rate Commission Plan, except instead of a commission percentage from the deal, the rep earns a set dollar amount tied to their quota attainment progress. Like the single-rate commission, the single-rate bonus does not change. Meaning, if the rep surpasses quota, they will not unlock a higher bonus rate. Note: This plan is both easily explained and understood amongst reps. A single rate bonus sales compensation plan can also be quickly adjusted to drive certain selling behaviors by increasing or decreasing the rate.
A Quota to OTE Ratio of 4 - 8 is best.
This plan only has one path: Single Rate Bonus (Revenue). The same bonus amount is paid out for every quota attainment point earned.
Because some members of my sales team have a quota that changes over time but I want them to have a consistent bonus every quarter, I use a single rate bonus.
VP of Sales
Per attainment point:
Per attainment point:
Monthly resale quota:
$20,000 Resale Revenue
Per attainment point:
As with most compensation plans, the two major components that will vary across sales teams are:
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.
To find the correct bonus rate, you first need to figure out what the available bonus is each period then divide by 100.
So take the total annual bonus, divide it by 1 if you have an annual quota, 4 if your quota is quarterly, and 12 for a monthly quota, then divide by 100.
Say you have a $54k total variable and a monthly quota. Take $54k divided by 12 is $4,500. Divide that by 100 and you get $45 bonus per attainment point.
This plan has a set bonus amount per attainment point of quota the rep achieves. For example, a rep might have a $100k quarterly quota and is paid $100 per quota attainment point. That means that if they end at 100% quota, they get $100 x 100 points, or $10k. If they end at 80%, they get $100 x 80 points, or $8k bonus.
Setting a bonus rate is fairly straightforward. First, you would take the total variable portion of the rep’s on-target earnings and divide that by the number of quota periods the rep has per year. So for example, if your rep has a $60k annual variable and a monthly quota, you would divide $60k by 12 (12 months in a year) and get $5k. Then you divide that $5k by 100 and get $50 per attainment point.
A plan that focuses on the quantity of deals pays the same rate regardless of the size of the deals. This plan allows you to compensate the rep based on their quota attainment.
A milestone bonus is earned when the rep meets designated stipulations and is paid a set amount, as a result. 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. Whereas with a single rate bonus (revenue) plan, the rep receives the same per-attainment point bonus regardless of quota attainment.
Sales bonuses differ from commissions in that bonuses are based on a set amount of money for completing a task. Meanwhile, commissions consist of a percentage of the total revenue from a deal. For example, If a rep gets 10% of every deal closed, that’s commission. If a rep earns $300 for every deal they close, that’s a bonus.
When it comes to sales compensation and commissions calculations best practices, the best thing you can do as a leader is clearly communicate the methodology behind your sales compensation model to your team. A close second would be to provide every stakeholder tied to commissions with a single source of truth that democratizes the often siloed commission process.
An Account Executive compensation plan that pays the same commission rate on all deals closed, regardless of quota attainment.
An Account Executive compensation plan that includes two bonus tiers that pay per quota attainment point