Stop Wasting Money on Sales Commissions.

Written By Stefan Hertzberg

This is written for SaaS founders, GTM leads, and CFOs who want clarity, alignment, and performance, without overcomplicating it. Every new sales leader comes in with a different structure, and a fresh plan - we are here to protect the company.

1. Keep It Stupid Simple

  • If your rep can’t explain it in one sentence, it’s too complex.

  • Your CFO should be able to audit it without Excel gymnastics.

  • One goal: drive revenue that gets billed and collected.

  • Use clear roles (AE vs SDR) with 1–2 core metrics max.

2. Structure the Plan Around These Core Ratios

Base/Variable Split:

  • 50/50 for most AEs

  • 60/40 for mid-market reps

  • 70/30 for Managers / Leaders in the org

  • Pro Tip: Anyone who thinks they should be 80/20 in the GTM org doesn’t believe in the comapny.

Quota:

  • Set annual quota at 5× OTE (e.g. $200K OTE = $1m recurring rev quota)

    • Think of this on a NTM MRR basis, $85k MRR

  • This ensures reps are ~10–20% of the ARR they close — sustainable and motivating

Commission Rate:

  • 10% of ARR is a common benchmark

  • Higher if quota is low; lower if volume is high

3. Time Payouts to Cash Realization

  • 40–60% of variable comp should be tied to when the account is live and billing

  • If you bill upfront: pay on signature

  • If you bill monthly: pay partial on signature, rest on first payment

  • Aligns Sales with Ops and Finance, no phantom revenue

4. Accelerators & Clawbacks: Use Caution

  • Don’t add accelerators (higher commission for over-performance) until you’ve nailed your baseline plan

  • If you do, mirror them with clawbacks (e.g. if a deal cancels in <90 days, partial payback)

  • Both tools are powerful and easy to misuse if your data’s messy or deals are inconsistent

5. Bonus Tools to Tune Behavior

  • Kickers: Extra % for multi-year deals or strategic logos

  • SPIFs: Temporary bonuses for specific product pushes - Gameify.

  • Payout Holdbacks: E.g. 10% bonus unlocked at 100% quota attainment

  • Use these sparingly, keep the primary comp lever tied to new ARR

6. Real-World Sample Plan (for a Series A/B SaaS AE)

  • OTE: $200K ($100K base / $100K variable)

  • Quota: $1M in new ARR

  • Commission:

  • 30% of commission on contract signature

  • 70% when customer is live + billing

    • (Maybe) Accelerator: 15% on revenue above quota

    • (Maybe) Clawback: If customer cancels or doesn’t pay in first 90 days

    • (Maybe) Kicker: +5% on multi-year contracts or top-tier logo wins

While this outline covers the core mechanics, it does not account for critical factors like churn, delayed onboarding, CAC/LTV analysis or team sizing. That’s where we come in. It’s a science, and every company and that companies financial dynamics vary.

We’re typically brought in on a 3-month engagement for this specific project. The first 30 days are focused on understanding the facts on the ground: your sales motion, historical financials & win rates, growth goals and budgeting. The next 30 are spent building the plan, pressure-testing it with leadership, and refining it based on feedback. In the final stretch, we implement and operationalize everything, including the dashboards and automation to track it all so that when you leave, it’s all built and ready for you to review quarterly.

If you want to dig in deeper, drop us a note … we genuinely love this stuff.

We’d love your feedback!

-Team Canopy VS

Stefan Hertzberg