Sales commission tier & bonus engine

Progressive tiers: pay the band, not the total

The most expensive commission plan error is applying a single rate to total sales based on the attainment band reached. A rep at 118% attainment who earns 7% on all $1,062,000 of credited sales receives $74,340. A progressive plan pays 3% on the first 80%, 5% on the next 20% and 7% on the final 18% — approximately $47,000. The difference is a 58% overpayment that compounds across the team.

Progressive bands are standard in well-designed plans because they reward overperformance without making the marginal cost of the last dollar disproportionate. The workbook computes each band independently and shows the sales credited to each, so the arithmetic is visible and auditable.

For each band: credited = min(total, band_high) − band_low  (floored at 0)
              payout   = credited × band_rate

Total commission = Σ band payouts
Plus accelerator  = sales above quota × top rate × (accelerator − 1)

Accelerators, decelerators and the shape of the curve

An accelerator increases the marginal rate above quota. It exists to make the best reps stay and to make overperformance worth chasing. A decelerator reduces the rate above a very high attainment — for example, above 200% — to protect the company from a windfall driven by a territory that was mis-sized rather than by effort.

Both deserve to be explicit. A common and defensible structure: 3% below 80% attainment, 5% from 80–100%, 7% from 100–120%, 9% above 120%, with a 1.5× accelerator on the first 20 points above quota. The workbook ships with this shape and lets you edit every band.

Clawbacks: when the deal does not stick

Commission paid on revenue that later churns is a real cost, and most plans address it with a clawback. The design question is the window: too short and it is symbolic, too long and reps reasonably object that they cannot control churn two years later.

A defensible structure claws back a percentage of commission on deals that churn within a defined period — commonly three to twelve months depending on contract length — at a rate that reflects how much of the commission was already paid. The workbook models both the proportion of deals affected and the clawback rate, so the expected deduction is visible in the plan design rather than a surprise on a payslip.

• Match the clawback window to the period over which the customer can realistically churn.
• Claw back a defined percentage of the commission, not the base salary — base is for time worked.
• Document the policy in the plan document before the period it applies to.
• State clawback rules must follow local wage-deduction law; get employment counsel involved.

Diagnosing a plan that is not working

Two numbers reveal most plan problems. The percentage of reps at or above quota should sit between 60% and 70% — higher means quotas are too low, lower means they are unrealistic. And the accelerator share of total payout should stay under about 30%; above that, the quota is structurally too easy to beat.

The third number is cost of sales, which is the company's view of the same question. Taken together these three diagnostics distinguish a plan that motivates from one that simply pays. The workbook computes all three, plus the payout distribution across the team so you can see whether compensation is concentrating in one or two reps.

• Reps at or above quota: 60–70% is the target band for a new plan.
• Accelerator share of payout: keep under 30%.
• Cost of sales: under 12% for SaaS, higher for transactional models with lower ACV.
• Payout concentration: if one rep earns more than 25% of the team payout, the territory is mis-sized.