Sales compensation is the most closely-analysed cost line in any growth company because it directly steers seller behaviour. A well-designed plan aligns quota, effort and profit; a poorly-designed one either bankrupts the company (over-paying on unprofitable deals) or drives top reps out the door. Understanding the math behind commission structures — whether you're negotiating a role, designing a plan or forecasting comp expense — starts with three levers: base, variable and structure.

Base plus variable is the modern default. SaaS Account Executives typically earn a 50/50 base-to-variable split at OTE (On-Target Earnings): if OTE is $200k, the deal is $100k base plus $100k variable at 100% quota attainment. Field sales tilts more toward base (60/40) because sales cycles are long and unpredictable. Inside sales and SDRs sit at 70/30 or 80/20 because pipeline output is highly correlated with activity. Pure commission (100% variable) is high-risk, high-reward — take it only when you own the pipeline and have savings to cover a 3–6 month ramp.

Tiered commission plans create sharp motivation at exactly the quota line. A common structure: 5% on the first $50k of monthly revenue, 10% on $50k–$100k, 15% above $100k. The jump in marginal rate at the quota threshold is what makes reps push hard through the last week of the quarter. This calculator handles unlimited tiers so you can model plans of any complexity, including SaaS 'kicker' tiers that reward multi-year contracts at higher rates.

Accelerators are the second lever. Above 100% of quota, commissions often multiply — 1× commission at 100%, 1.5× at 120%, 2× at 150%. Modeling accelerators correctly is essential for both the rep (understanding upside) and the finance team (forecasting cost). Bad accelerator design can create 'sandbagging' incentives: reps pull deals forward or push them back to time their attainment for maximum payout.

Draw against commission is a common structure in industries with long sales cycles (industrial equipment, medical devices, enterprise software). The employer pays a fixed 'draw' each period; actual commission earned is subtracted from the draw, and the rep keeps the greater of the two. Recoverable draws roll unpaid balances forward as debt (dangerous during ramp). Non-recoverable draws don't — always negotiate for non-recoverable during the first 6–12 months.

Under US FLSA, non-discretionary commissions must be included in the 'regular rate' used to compute overtime. A commissioned inside-sales rep working overtime has a higher effective OT rate than their base wage suggests. Employers frequently forget to recompute this, resulting in wage-and-hour lawsuits. Use this calculator alongside our Overtime Pay Calculator to verify total compensation, and export the plan comparison as PDF before signing any offer letter or comp plan revision.