Sales Compensation FAQs for Employers

Last updated: June 2025

→ All answers are written by Mike Basso, CEO of SalesTalent.com — a 6-time executive sales leader and expert in sales hiring and recruiting.

What’s a fair base salary and commission structure for a sales rep?

Comp structures vary by industry, location, experience level, and sales role. For current base salary and OTE benchmarks, please visit salestalent.com/comp, which will be available soon. Here are some common base/commission splits and structures:

• Lead Gen (SDR/BDR): 60/40 or 70/30 base-to-variable mix, usually tied to qualified leads that convert to pipeline.
• Full-Cycle Sales (AE, Sales Rep): 50/50 base-to-variable mix, with variable pay based on quota attainment or percentage of sales.
• Sales Farmer (Account Manager): 60/40 or 70/30 mix based on revenue growth, renewals, and upsell attainment.
• Sales Hunter (Account Executive): 50/50 mix based on new sales.

Commission fairness depends on quota difficulty and earning potential. For new plans or roles, validate with market data and adjust based on sales cycle complexity and deal size.

What’s a typical commission rate for B2B sales roles?

Range: Commission rates typically fall between 3% and 12% of the gross sale..

Influencing factors include:

• Base salary level
• Average deal size
• Profit margin
• Industry norms

High-value or complex sales (e.g., SaaS enterprise deals): OTE often ends up being 100% of base pay (e.g., $150K base + $150K commission = $300K total).

Industrial or physical goods roles: Higher base pay, lower commission rates—typically a 70/30 or 60/40 base-to-variable split—often with commission rates around 4 to 7%.

What percentage of OTE should be base salary versus commission?

The base/commission split in a sales rep’s On-Target Earnings (OTE) varies by role and industry. In SaaS or Tech:

• Full-cycle AEs and hunters are often 50/50.
• Account Managers’ OTE splits are typically 60/40 or 70/30.
• SDRs/BDRs may have 70/30 or 60/40 splits depending on complexity and quota.

In industrial or non-tech markets, splits often lean heavily toward the base — 70/30, 60/40, or even 80/20 — due to lower-margin products and more full-cycle selling responsibilities.

How do I structure a sales compensation plan to motivate reps without overpaying?

Uncapped commissions best motivate sales reps, but if commission cost is a concern, consider:

• A soft cap — e.g., reduce the rate after 150% of quota
• A windfall clause — allows review or adjustment for unusually large, one-off deals with low rep effort

Be careful not to cap commission as this will cause sales reps to “take their foot off the gas” once they meet quota. Capping commissions will also quickly drive away good sales reps.

What’s a good sales quota or target for reps in my industry?

Quotas vary widely by industry, deal size, and sales cycle length — but here’s a simple framework

• Start with average deal size, win rate, and sales cycle.
• Estimate the volume of closed deals needed to hit the company’s target.

For example:

• If a rep works a 90-day sales cycle with $20K average deal size and a 33% win rate on 30 opportunities per quarter..They’ll close ~10 deals per quarter, or $200K — totaling $800K per year in quota.

In SaaS or Tech $800k is a common target for mid-market AEs. Enterprise reps with fewer, larger deals will have higher quotas of $1 to 1.5 million; transactional reps may have higher volume/lower value quotas.

How should compensation differ between new business hunters and account management farmers?

Hunters typically earn more upside — and sometimes a slightly higher base — because landing new business is riskier, harder to predict, and requires more outbound skill.

• Hunters (Account Executives): Often compensated on a 50/50 base/commission split, with uncapped plans and earnings potential well above base if they exceed quota.
• Farmers (Account Managers): Tend to be on 60/40, 70/30, or capped/soft-capped commission plans since they work existing clients and more predictable revenue.

Because great hunters are harder to find and train than account managers, their comp plans reflect that. Supply and demand play a significant role in driving higher OTE and commission upside for hunter roles..

How do I structure OTE for different roles like SDR, AE, and Enterprise reps?

The two key parts of structuring OTE are the base-to-variable mix and how the variable portion is earned.

• SDRs typically have a 60/40 or 70/30 split. Their variable comp works best with a stepped commission per qualified lead that enters pipeline. Higher pay is tied to more qualified leads, paid monthly.
• AEs are usually 50/50, whether mid-market or enterprise. Their commission is often tied to closed ARR or total contract value.
• Account Managers are typically 60/40 and paid on upsells, renewals, and revenue growth.

Each plan should reflect how the role contributes to revenue and align incentives with company goals.

Should commissions be capped or uncapped for sales reps?

An uncapped commission plan is the better model. Capping earnings demotivates high performers, reduces revenue momentum, and increases rep attrition — especially if a rep hits quota mid-year and stops pushing.

If commission cost is a concern, consider:

• A soft cap — e.g., reduce the rate after 150% of quota
• A windfall clause — allows review or adjustment for unusually large, one-off deals with low rep effort

Top reps expect to be rewarded for outsized performance. If they feel penalized for success, they’ll leave — and take your revenue growth with them.

What sales compensation structures are most effective for attracting and retaining top sales talent?

The best comp plans strike a balance: pay reps as much as possible while still meeting company profit goals.

The most effective plans:

• Pay a clear percentage of revenue
• Focus more on new sales, with lower rates for renewals and expansion
• Include commission accelerators for overachievement
• Are uncapped

When reps can earn more by overdelivering — and there’s no ceiling on commission — you’ll attract and retain top performers.

How can I build a comp plan that rewards both new sales and renewal business effectively?

The most effective approach is to specialize your team:

• Hunters close new business.
• Farmers manage renewals, upsells, and retention.

Trying to motivate one rep to do both usually leads to weak performance on one side.

If you must combine roles (e.g., small team):

• Pay 2x the commission rate for new business.
• Pay 1x for renewals and expansion
• Consider a commission multiplier if both new and renewal targets are hit

All comp plans should be modeled with the CFO to ensure profitability and scalability — especially when layering accelerators or commissions

What mistakes should I avoid when creating a sales comp plan?

The most common mistake is failing to conduct proper due diligence. Skipping financial modeling or excluding the CFO and sales leader from planning can lead to overpayment, underpayment, or a misaligned plan.

Another significant issue is changing the comp plan too often. Constant shifts frustrate reps and are one of the top reasons high-performers leave. A strong plan is financially sound, clearly structured, and stable enough to earn your team’s trust.

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