An SDR compensation plan that pays the SDR bonuses on demos completed and qualified opportunities, plus commissions on closed/won deals that originate from their leads.
Opps Created & Demos Completed Bonuses, & Closed Won Commissions
This SDR comp plan combines the Qualified Opportunity Bonus, the Demos Completed Bonus, and the Closed Won Commission structure by offering the rep three streams to earn variable pay. Note: This SDR comp plan encourages reps to focus their time on serious leads with high potential to close. We recommend setting a commission rate much less than the AE plans. For example, an SDR might earn 3% on the deal, while the AE collects 10%. Additionally, you’ll want to set the bonus for demos completed lower than the bonus for opportunities created. See FAQs below for more info.
$75K
On-Target Earnings
$150K
Quarterly Quota
$51K:$24K
Base:Variable
8x
Quota:OTE
Model your plan
Forecast Earnings
Split
68:32
Quarterly Demos Bonus
Quarterly Opps Bonus
Quarterly Quota Commission
Revenue:OTE
8.0x
We recommend a ratio of 4 to 10x
$1-$30 million
ARR
Build a funnel
Quarterly
Paths
Path 1: Quarterly Demos Bonus
Path Description
Quota
Type
Earnings Rule
This plan combines three paths, Qualified Opportunity Bonus, the Demos Completed Bonus, and the Closed Won Commission that applies to every won deal from an SDR lead. The Demos Completed Bonus accounts for 25% of the total variable.
Path 2: Quarterly Opps Bonus
Path Description
Quota
Type
Earnings Rule
The second path, Qualified Opportunities Bonus, is similar to the Demos Completed Bonus but only pays when an opportunity is more likely to close and therefore hits a ‘Qualified’ stage. This bonus accounts for 50% of the total variable.
Path 3: Quarterly Quota Commission
Path Description
Quota
Type
Earnings Rule
The third path, Closed Won Commission, pays a single, flat rate commission on all deals that the SDR has sourced that is closed won. This commission accounts for 25% of the total variable.
We want our BDRs focused on moving leads through the sales funnel without sacrificing quality. Then, to reward them a little something extra for their efforts, we added commission to deals that close from their leads.
- Tim B.
Director of Business Development
Plan Examples
Sales Development Rep
Monthly quota:
$50,000 ARR
Monthly quota:
10 Qualified Opps
Monthly quota:
20 demos completed
Base commission rate:
1%
Bonus per qualified opp:
$100
Bonus per demo:
$25
Market Development Rep
Monthly quota:
$40,000 ARR
Monthly quota:
20 Qualified Opps
Monthly quota:
30 demos completed
Base commission rate:
2.75%
Bonus per qualified opp:
$40
Bonus per demo:
$20
How to customize this plan
As with most compensation plans, the two major components that will vary across sales teams are:
Quota
Begin by setting your quota period. All three quotas should follow the same period. Your quota period is the frequency at which a rep is held to that sales quota.
The majority of plans we see follow monthly frequencies unless you run an enterprise sales team, which typically has a quarterly cadence. Once you come to your quota period, now you can determine a quota that is low enough to be attainable and high enough to be profitable.
Commission Rate
To set your commission rate for this plan, take the portion of the SDR’s total variable compensation assigned to revenue if they hit their revenue target (for example, $10k/year) and divide that number by their annualized revenue quota (for example, $500k/year). Given those two examples, that would be $10,000/$500,000 = .02 or 2% commission.
We typically see commission rates for SDRs between .5% and 6%.
Bonus Rate
To find your bonus rates, think about how many qualified opportunities your SDRs should create month or quarter, and how many demos should complete in order to hit your revenue targets. to open each month or quarter. (Hint: Use our Sales Funnel!) When you have that determined, you’ll have the applicable bonus for your quota period and demos completed.
Note: Your bonus for demos completed should be less than opportunities created if your plan pays on both.
For monthly quotas, divide the annual bonus by 12. For instance, say you have a target of 10 qualified opportunities per month and an annual bonus of $12k. Divide $12k by 12 to reach the monthly bonus of $1k, which you would then divide by the 10 qualified opportunities, giving you a $100 bonus per qualified opportunity generated.
Creating the bonus for demos completed follows a very similar pattern, but you should have a higher target for number of demos completed, so the bonus is likely to be lower. Using the same information from above, assuming a $12k annual bonus, you would have a $1k monthly bonus. If you have a target of 20 demos completed each month, that would give you a per-demo bonus of $50.
Frequently Asked Questions
What makes this a good SDR compensation plan?
This is SDR compensation plans provides three opportunities for SDRs to make OTE while putting quality control on their leads. It has the rep’s interest in mind and cleans up the pipeline with stronger opportunities.
What’s a good commission rate for this plan?
Typically, SDR commission percentages fall between .5% to 6%. This is highly dependent upon how much you’re incentivizing quality over quantity.
What's a good bonus amount for each of the bonuses here?
That depends entirely on your business needs! Some plans offer a $500 bonus per opportunity or $20 bonus on a demo completed. We do not recommend rewarding the same amount on both activities. Instead, set the bonus based on the value of the activity. For instance, generating a qualified opportunity is a more valuable activity than a demo that completes. Your bonuses in this plan should reflect that.
What other SDR comp plans should I consider?
This plan blends three of the most widely adopted SDR compensation plans. While that can be a good thing, it also can be confusing to reps who might want just one metric to focus on. If you want your team focusing exclusively on creating new opportunities, we suggest the Qualified Opportunity Bonus. For something that puts a bit more quality control on their efforts but keeps the control with the SDR, consider the Demos Completed Bonus. Or, you could just offer Closed Won Commission structure, but we don’t typically recommend this because so much of their success falls outside of their control. In any case, QuotaPath can track and payout these plans to make it a bit easier on your finance and revenue teams.
What about activity-based SDR comp plans?
Like demos completed and qualified opportunities created sales compensation models, some companies will pay SDRs a bonus for hitting a specified number of activities over the course of a week, month, or quarter. You’ll have to define 'activities,' because this word can mean anything from the number of cold calls made, to the number of emails sent, to the number of new prospects added to your CRM. Make sure you clearly define what constitutes as an activity and design your plan accordingly.
What is a sales funnel?
A sales funnel tracks the customer’s journey from prospect, through lead, to customer. All funnels include various stages with the goal to move the customer through the stages until the purchase. More commonly, you’ll see TOFU, MOFU, and BOFU associated to indicate top of funnel, middle of funnel, and bottom of funnel. Those in the top are least likely to close, while those in the bottom are most likely to convert to a customer.
How do you analyze your sales funnel?
Our free Sales Funnel calculator can be used by SDR and sales teams to calculate scenarios like how many meetings they need to book in order to reach quota. Use it to experiment with different close rates, average contract values, and activities to see what’s right for your business, team, and individual goals. Great for 1:1 meetings and building SDR comp plans.
What is an SDR?
In sales, an SDR is an acronym for sales development representative. This role typically sits within the sales function but may also fall under marketing. Their main responsibilities involve prospecting, setting appointments, and generating qualified leads to pass along to sales. To learn more about sales compensation for SDR teams, read our blog.
