How to write your first sales comp plan (with template)

Most first sales comp plans get one of three things wrong: the base is set for a rep who doesn’t exist yet, the quota is anchored on last year’s wish instead of this year’s reality, or the payout structure quietly caps your best rep at exactly the moment you need them to keep pushing. This post walks the whole framework — the five decisions every comp plan has to answer — and then hands you complete AE and SDR templates with real numbers you can copy, adjust, and paste into your own doc.

If you’re building your first plan right now, you can model the whole thing in Gordon’s comp calculator while you read. Every number below can be tested there against public benchmarks.

The five decisions every comp plan has to answer

A sales comp plan is not a spreadsheet. It’s five specific decisions, written down. Get these five right and the details take care of themselves. Get one of them wrong and the plan breaks quietly, three quarters later, when you can’t figure out why your reps are behaving strangely.

1. Who am I paying?The role you’re hiring for — SDR, AE, or player-coach leader — determines every other number in the plan.
2. What’s the target total earnings (OTE)? The number a rep hitting 100% of quota takes home in a year. Anchor for everything downstream.
3. What’s the base/variable split? How much is salary (guaranteed) vs commission (at-risk). Sets the behavior signal to the rep.
4. What’s the quota? The number that triggers 100% payout. Set too high and reps disengage; set too low and they coast.
5. What’s the payout structure? Flat rate, tiered accelerators, or per-unit — determines how the last dollar of variable pay is earned.

Decision 1: Who am I paying?

The role sets the shape of the entire plan. A sales development rep’s comp looks nothing like an account executive’s, and neither looks like a Head of Sales. Nail this first — if it changes later, every other number has to change too.

For a founder building their first plan, the question usually collapses to two: leader or an AE first, and if you go AE, how to hire the right one. For SDRs specifically, the in-house vs agency question comes first. Answer those before you touch a comp doc.

One thing to avoid: writing a plan for a “full-cycle rep” who does both prospecting and closing. It looks efficient on paper. In practice it’s a signal that you haven’t decided which motion you’re actually running, and full-cycle reps end up doing whichever half is easier that week.

Decision 2: OTE anchor

OTE (on-target earnings) is what a rep hitting 100% of quota earns in a year. Every other number in the plan derives from it. If you get OTE wrong on the low end, you’ll lose good candidates in the interview loop. If you get it wrong on the high end, your unit economics break.

Anchor by role and stage. Public benchmark data (RepVue, Bridge Group, ClosedWon) puts 2026 medians roughly here:

• SDR / BDR: $60–85k OTE, with $50–65k base. Seed-stage typically at the low end; Series B and beyond push to the top. Full SDR breakdown here.
• AE (SMB): $120–160k OTE, $60–80k base.
• AE (Mid-market): $180–240k OTE, $90–120k base.
• AE (Enterprise): $240–320k OTE, $120–160k base.
• Sales Leader (Head of Sales / VP): $260–410k OTE, $140–230k base.

These are US medians. If you’re pre-Series A, anchor 20% lower and offer equity to close the gap — most early-stage candidates will accept that trade in return for real ownership. Model your specific number in the calculator against your stage.

Decision 3: Base vs variable split

Once you have OTE, the base/variable split decides how much of it is guaranteed salary vs at-risk commission. This is the single biggest behavioral lever in the plan — it’s the signal you send about how much risk the rep should take.

Standard splits by role:

• SDR: 70/30 or 65/35 (base/variable). SDRs have less control over outcomes — inbound flow, AE availability, territory quality all affect their number. A higher base reflects that partial dependence.
• AE: 50/50. Industry standard. Real skin-in-the-game commission but enough base to weather a slow quarter without panicking.
• Enterprise AE (long cycles): 60/40. Longer cycles mean commission is more variable quarter to quarter; higher base smooths cash flow for the rep.
• Sales Leader:55/45 or 60/40. They’re also responsible for hiring, ramp, and retention — not just number-hitting.

The temptation for founders is to compress the ratio further toward base (“we’ll pay more base since we don’t have much pipeline yet”). Resist. A rep on 80/20 will behave like an employee, not a salesperson. If your pipeline is thin, fix the pipeline — don’t hide it in the comp plan.

Decision 4: Quota

Quota is the single most misunderstood number in a comp plan. Founders overthink the math and underthink the message. Quota is not a math target — it’s a signal to your team about what a good year looks like. Reps model to that signal. Attainment expands to the quota you set — but only within a realistic band.

The founder-usable formula: annual quota = OTE × 4-6. Lower multiplier for higher-touch enterprise motions, higher multiplier for velocity SMB. An AE at $150k OTE with a mid-market motion gets roughly a $600k–$900k annual quota. Full walkthrough in how to set your first sales quota.

Cross-check the OTE-multiplier number against reality: your top rep’s actual output last year, industry benchmarks for your stage, and — critically — the pipeline math (do you have enough qualified opportunity for the quota to be reachable?). Set the target so 60-70% of reps hit each cycle. Higher than that = your quota is soft. Lower than that = either the quota is broken OR something upstream of the rep is broken.

Decision 5: Payout structure

The last decision: how does variable pay actually get earned? Three common structures, each with a different behavioral signal:

Flat commission

Every dollar of quota-attained sales earns the same percentage. Simplest to communicate, easiest to run in a spreadsheet. Downside: no incentive above 100% attainment — every dollar past quota pays the same as every dollar before, which invites reps to sandbag and roll deals into next quarter.

Tiered accelerators

Standard AE structure. Below quota, commission is at the base rate. At 100% attainment, the rate jumps (a 1.5x accelerator is standard). At 150%+ attainment, it jumps again (2x). Signals to reps “push past quota, the extra effort pays.” This is what most SaaS AE plans use.

Retroactive vs incremental: Retroactive means the accelerator applies to ALL sales in the tier once you hit it (crossing 100% retroactively pays 1.5x on everything). Incremental means only the marginal dollars above the tier get the accelerator. Retroactive is more motivating and more expensive; incremental is safer for cash flow but signals less urgency at the tier boundary.

Per-unit (flat $ per meeting or deal)

Standard for SDR/BDR. Every completed meeting pays a flat dollar amount. Simple, transparent, and reps understand exactly what each meeting is worth. Downside: doesn’t differentiate a high-value meeting from a low-value one, so SDRs may optimize for volume over quality.

The template: complete AE + SDR plans

Here are two ready-to-use plans, sized for a seed-stage SaaS company selling mid-market ACV ($30–60k). Adjust the numbers for your stage and ACV, but the structure is copy-pasteable.

Two conventions worth calling out from the template above:

• Clawback on the AE side.If a deal closed-won churns inside 6 months, that portion of the commission gets clawed back from a future check. This isn’t punitive — it aligns the AE with retention, not just close. Common in SaaS at 6-12 months.
• SDR quota is SAOs, not meetings booked.A “sales-accepted opportunity” is a meeting that the AE has vetted as legitimate. Paying SDRs on booked meetings (before AE vetting) invites low-quality bookings. Paying on SAOs aligns quality with the SDR’s incentive.

Three traps that break most first plans

Trap #1: Setting quota against wishful pipeline

Founders set quota based on the ARR target they need to hit for the board, not the pipeline math the rep will actually see. If your rep can’t reach quota because the top-of-funnel isn’t there, that’s not a rep problem — it’s a marketing/PMF problem showing up in the comp plan. Diagnose the trap before you fire anyone.

Trap #2: Skipping the ramp schedule

A new rep at month one is not producing at full-quota level. If your plan pays 100% variable against full quota from day one, that rep will miss badly, get demoralized, and blame the plan. Standard ramp: 25% quota M1, 50% M2, 75% M3, full M4+ for AEs. Faster for SDRs. Missing this makes a good hire look broken.

Trap #3: Capping commission (or accidentally capping it)

Some founders explicitly cap total commission (“no rep can earn more than 200% of OTE”). Others cap it accidentally by writing a flat-rate plan with no accelerators. Both signal the same thing to your best rep: pushing past quota isn’t worth the effort. Your top rep is the one paying for the cap — and they’re also the one who’ll leave for a competitor without one.

The plan document itself

Whatever structure you land on, write it down as a real document that the rep signs on their first day. Ideal contents:

• The five decisions above, filled in with your specific numbers
• A worked example — “if you close $800k this year, here’s how the math shakes out”
• Payment timing (monthly vs quarterly, and how it’s calculated)
• Clawback terms if any
• What happens if you leave (deal in progress at departure, etc.)
• Effective dates and when the plan gets reviewed (annually is standard)

Every rep on your team should be able to explain their comp plan to a friend at a bar in under three minutes. If they can’t, the plan is too complex — and complex plans create weird incentives you didn’t intend.

What to do next

Model your specific plan in the calculator with your OTE and stage — it’ll show you where your numbers land against public benchmarks and flag anything that’s out of range. Then, if you’re making a specific hiring decision:

• Deciding leader-vs-AE first? The decision framework.
• Making your first AE hire? How to hire your first AE.
• Considering in-house vs agency for SDRs? Which one actually works and when.
• Setting quota specifically? The OTE-multiplier framework and why attainment expands to the number you set.
• Weighing a big-brand hire from Salesforce or LinkedIn? Why it usually disappoints.
• Building the SDR side specifically? SDR compensation benchmarks 2026.