sales-comp-design

{
  "skill_name": "sales-comp-design",
  "evals": [
    {
      "id": 1,
      "prompt": "Halbrook, we sell warehouse routing software. 22 AEs, the plan is 40 base / 60 variable, $180K OTE, $900K quota each. Last year six reps finished above 150% and we overran the commission line by $740K. Our CFO wants to cap payouts at 150% of target variable and apply it to the deals already closed this year. Meanwhile my VP Sales wants to take the accelerator from 1.5x to 3x above 100% so we stop losing people to a competitor. Give me the new rate table for FY27.",
      "expected_output": "A marginal rate table whose accelerator sits at or below the 1 / 0.6 bound, a windfall review clause instead of a cap, the retroactive cap refused and routed to counsel, the decelerator decided explicitly, and a high-attainment cost model required before publication.",
      "files": [],
      "expectations": [
        "Rejects applying a retroactive cap to commissions on deals that have already closed.",
        "States that capping payouts after the fact under a plan document that said uncapped has produced litigation and settlements.",
        "Routes any cap language to legal counsel rather than resolving it inside the plan.",
        "Rejects the proposed 3x accelerator.",
        "Computes the accelerator bound explicitly as 1 divided by the 0.6 variable share, approximately 1.67x the base rate.",
        "Recommends an accelerated rate at or below that bound.",
        "Specifies the rate bands as marginal, with each rate applying only to the attainment falling inside its own band.",
        "Warns against a cumulative rate table that reprices all prior attainment when a threshold is crossed.",
        "Proposes a windfall review clause for outsized single deals in place of a payout cap.",
        "States the windfall trigger as a share of annual quota.",
        "Treats the decelerator as an explicit decision, either adopted with a reason or declined with a reason.",
        "Requires modeling the plan's cost at a high-attainment scenario before the rate table is published."
      ]
    },
    {
      "id": 2,
      "prompt": "Vantera, B2B compliance SaaS, about $40K ACV. We're standing up a 9-person pipeline generation team, 4 inbound and 5 outbound. Draft their comp plan. What I had in mind: $75 per meeting booked, a $500 monthly bonus for anyone averaging 150 dials a day, and a SPIF every single month so there's always something to chase. Same plan for inbound and outbound so it's fair. OTE around $75K.",
      "expected_output": "A plan paying on qualified opportunities rather than booked meetings, with the dial bonus removed, no more than three measures, separate mixes for inbound and outbound seats, and a bounded SPIF policy replacing the monthly cadence.",
      "files": [],
      "expectations": [
        "Replaces pay-on-booked-meetings with qualified opportunities as the focus measure.",
        "States that paying on booked meetings pays for spam and pollutes the account executive pipeline.",
        "Rejects the daily-dial activity bonus as a paid measure in a direct-seller plan.",
        "Caps the plan at no more than three paid measures.",
        "Names one financial or output measure as the plan's focus.",
        "Sets a different pay mix for the outbound seat than for the inbound seat.",
        "Gives the outbound seat the higher variable share, on the grounds that the rep creates the opportunity.",
        "Rejects running a SPIF every month.",
        "States that a SPIF recurring on a predictable calendar stops being an incentive and becomes expected baseline pay.",
        "Limits SPIFs to a small number per year, with windows measured in weeks and deliberate gaps between them.",
        "Recommends varying SPIF timing and minimizing advance notice so reps cannot delay deals into a known window.",
        "Anchors SPIF eligibility on close date."
      ]
    },
    {
      "id": 3,
      "prompt": "Kelburn Analytics. We have 6 CSMs and they own about $14M of ARR between them. Right now they're salaried with no variable at all. Leadership wants them on the same 50/50 split our AEs run, paid on one blended net revenue retention number for their book, plus a kicker whenever they help source a new logo. We've never tracked retention per CSM before, the data only exists at company level. Write the plan.",
      "expected_output": "A base-heavy customer-success plan with GRR and NRR paid separately, a GRR floor gating expansion pay, no new-logo pay, book-of-business crediting, and a baseline-first rollout since no per-person history exists.",
      "files": [],
      "expectations": [
        "Rejects a single blended retention number as the paid measure.",
        "Splits gross revenue retention and net revenue retention into two separately paid metrics.",
        "States that a single blended number lets one large expansion mask churn elsewhere in the same book.",
        "Gates expansion pay behind a gross-revenue-retention floor.",
        "Rejects the 50/50 pay mix for the customer-success seat.",
        "Recommends a base-heavy mix for the retention seat, justified by that role's lower influence over the outcome.",
        "Rejects paying the customer-success seat on new-logo bookings.",
        "Recommends tracking the retention metrics per individual with no variable pay attached for a period before setting any target.",
        "Sets first-cycle targets as an improvement over the observed baseline rather than an invented number.",
        "Uses book-of-business crediting rather than per-deal credit for this seat.",
        "Notes that MBOs are acceptable in this plan because the job genuinely includes non-output work.",
        "Does not claim a back-test against real prior-cycle per-person retention data, since none exists yet."
      ]
    },
    {
      "id": 4,
      "prompt": "Ardentia. We're 7 months into FY26. We launched a second product line in March and it's not moving, AEs won't touch it because their plan pays the same on it as on the core product. I want to rewrite the AE plan effective Oct 1: add a fourth line for new-product ARR at 20% weight, and fund it by dropping the accelerator from 1.5x to 1.25x. 30 AEs. How should I roll this out?",
      "expected_output": "A time-boxed SPIF recommended in place of the mid-cycle rewrite, the fourth measure and the accelerator cut both refused, the SPIF sized self-funding on outcome metrics, and the durable change deferred to the annual redesign.",
      "files": [],
      "expectations": [
        "Recommends a time-boxed SPIF instead of rewriting the plan mid-cycle.",
        "States that a mid-cycle change to pay opportunity is a governance exception requiring its own sign-off.",
        "Names mid-year plan changes as a known demotivation and turnover cause.",
        "Notes that a mid-cycle plan change requires re-signed commission agreements.",
        "Rejects adding a fourth paid measure to the account executive plan.",
        "Holds the plan to at most three paid measures.",
        "Sizes the SPIF against the standing commissions budget so it is self-funding.",
        "Specifies the SPIF metric as an outcome rather than an activity count.",
        "Bounds the SPIF window to weeks rather than the remainder of the fiscal year.",
        "Declines to lower the already-published accelerator rate mid-cycle.",
        "Recommends folding the behavior into a standing measure at the annual redesign if it must persist beyond the SPIF."
      ]
    },
    {
      "id": 5,
      "prompt": "Founder here, Sablewood, workflow software at about $45K ACV. Just hired AEs #1 through #3 and they start in January. From what I've read AEs are 50/50, so $160K OTE means $80K base and $80K variable. I'm setting each of them at $1.1M in new ARR. For the commission rate I want to match Coreflow, our closest competitor, whose reps tell us they get 15% of ARR. Sanity check this for me before I send the offers?",
      "expected_output": "The convention-copied mix and the borrowed 15% rate both rejected, the mix / quota:OTE / rate identity worked through on the stated figures, the quota question handed off, and a governance and signature floor set.",
      "files": [],
      "expectations": [
        "Rejects setting the pay mix by copying a benchmark or a competitor's plan.",
        "Derives the pay mix from the role's influence over the outcome in this company's motion.",
        "States that pay mix, quota-to-OTE ratio, and commission rate form a single system.",
        "States that fixing any two of those three determines the third.",
        "Computes target variable pay as $80,000 from the $160,000 OTE at a 50/50 mix.",
        "Computes the quota-to-OTE ratio as roughly 6.9x from the $1.1M quota and the $160,000 OTE.",
        "Rejects the 15% commission rate as inconsistent with the stated OTE and quota.",
        "Derives the implied commission rate at quota as roughly 7% of new ARR.",
        "Flags the quota-to-OTE ratio as sitting above the common band.",
        "Hands the quota question to the separate quota-setting exercise rather than resetting quota inside the comp plan.",
        "Names who designs, who validates the cost, and who signs before the numbers are finalized.",
        "Requires a written plan document signed by each rep, carrying published start and end dates matching the fiscal year."
      ]
    },
    {
      "id": 6,
      "prompt": "Merrilow Health Software. I'm writing our FY27 commission plan document. Reps: 12 in California, 6 in New York, 9 in Texas, 4 in London. Here's what I want the plan to say, please draft the language. One: if a customer churns inside 12 months we recover 100% of the commission, at our discretion. Two: no commissions paid on anything that closes after a rep's last day, no exceptions. Three: our inside sales reps are commissioned so they're overtime-exempt. Four: job postings list base salary only, since OTE varies so much. Can you write these clauses?",
      "expected_output": "Every one of the four items flagged as a counsel gate rather than drafted as settled language, with the earned-wage principle, sole-discretion clawback risk, procuring cause, the inside-sales exemption gap, full-OTE posting ranges, and the UK jurisdiction each raised.",
      "files": [],
      "expectations": [
        "Flags each of the four items to legal counsel rather than resolving it in the plan.",
        "Notes that several US states mandate a written commission agreement signed by the employee.",
        "Names California and New York among those jurisdictions.",
        "States that an earned commission is generally treated as a wage.",
        "Warns against clawback language exercised at the company's sole discretion.",
        "Requires the plan to define the earning event precisely for any clawback to be defensible.",
        "Narrows the clawback to a stated cause and a stated window rather than blanket recovery.",
        "Raises the procuring-cause doctrine for commissions on deals closing after a rep departs.",
        "States that plan silence on post-termination commissions defaults in the rep's favor.",
        "Challenges the assumption that the inside sales reps are exempt from overtime.",
        "Notes that the outside-sales exemption does not cover phone or internet selling.",
        "Recommends the job postings quote a good-faith full-OTE range rather than base salary alone.",
        "Treats the London-based reps as a separate jurisdictional question rather than assuming the US analysis carries over."
      ]
    },
    {
      "id": 7,
      "prompt": "Fluxgate. We're switching from per-seat subscriptions to consumption pricing on Jan 1. Our 11 AEs are paid today on new ARR at signature. Under the new model a customer signs a commitment and then the actual revenue lands over anywhere from 6 to 18 months depending on how fast they ramp. What's the standard way companies pay AEs on this? Just tell me what everyone does so I can copy it.",
      "expected_output": "An explicit statement that no settled practice exists, several competing designs presented side by side with their trade-offs and the annuity risk named, none declared the standard, plus the three-measure cap, a back-test requirement, and the quota question handed off.",
      "files": [],
      "expectations": [
        "States that the booking event stops being a cleanly payable measure once revenue lands over months.",
        "States that no settled industry best practice exists for usage-based sales comp.",
        "Presents more than one competing design rather than naming a single standard.",
        "Names consumption run-rate as one candidate paid measure.",
        "Names a hybrid bookings-plus-overage crediting design as another candidate.",
        "Names a design weighting bookings against consumption by account maturity or territory profile.",
        "Raises the risk that consumption-tied comp becomes an annuity that stops tracking new selling effort.",
        "Does not declare any one of the candidate designs the industry standard.",
        "Holds the plan to at most three paid measures.",
        "Requires a back-test against actual prior-cycle per-rep performance before rollout.",
        "Routes the re-derivation of the quota itself to the separate quota-setting exercise."
      ]
    },
    {
      "id": 8,
      "prompt": "Tarnbridge. 18 AEs, 5 solution engineers, 3 first-line managers. Two problems. First, when an SE works a deal we split the credit 70% AE / 30% SE and it causes constant fights, and the SEs also sit on a 50/50 plan like the AEs. Second, my managers are on a flat $40K annual bonus tied to total company revenue and they've basically stopped coaching. Oh, and last quarter two AEs in different territories both worked the Rendell account, we decided the split after it closed, and both are still furious. How do I fix all this for next year?",
      "expected_output": "Double credit replacing the 70/30 split, a base-heavy overlay plan tied to the supported team's quota, a team-attainment override with over-assignment replacing the managers' flat bonus, and a written forward crediting rule instead of relitigating the closed deal.",
      "files": [],
      "expectations": [
        "Replaces the 70/30 single-credit split between the account executive and the solutions engineer with double credit.",
        "States that under double credit both the primary rep and the specialist are credited fully.",
        "Rejects the 50/50 pay mix for the solutions-engineer seat.",
        "Recommends a base-heavy mix for the overlay seat.",
        "Ties the overlay's quota to the supported team's product quota.",
        "Weights most of the overlay's variable pay on the supported team and the remainder on the broader team.",
        "Replaces the managers' flat company-revenue bonus with a rollup on team attainment.",
        "Names collective override and individual override as the two rollup forms.",
        "Recommends deliberate over-assignment, with the sum of rep quotas exceeding the manager's own number.",
        "Rules out individual deal credit for the manager.",
        "Allows MBOs in the manager plan as a deliberate exception to the rule against them in seller plans.",
        "Requires the multi-rep split rule to be written before a deal closes.",
        "Declines to settle the already-closed Rendell split as the fix, and writes the forward-looking rule instead."
      ]
    },
    {
      "id": 9,
      "prompt": "Solaridge, residential solar, 40 field reps, straight commission and no base. I want to professionalize this next year so I've been reading up on SaaS comp and want to bring it over: 50/50 pay mix, quota set at 5x OTE, accelerator kicking in above 100%. Keep the recoverable draw we already run, we deduct any negative balance from the final paycheck when someone leaves, and I want to add a 90-day clawback if the install gets cancelled. About 55% of new reps don't make it past their first year. Does this plan work?",
      "expected_output": "The transferred B2B mechanics refused one by one, the design redirected to rate tiers, draw terms and clawback windows, the negative-balance recovery flagged to counsel, and first-year attrition priced in as a design input rather than treated as a management problem.",
      "files": [],
      "expectations": [
        "States that the base/variable pay-mix derivation does not apply to a straight-commission seat with no base.",
        "Rejects importing the 50/50 mix into this plan.",
        "States that the quota-to-OTE convention is built on salaried-base B2B comp and does not transfer.",
        "Rejects the accelerator-above-100% mechanic as a transferred B2B convention.",
        "Treats the quota as a performance-management floor rather than a payout trigger.",
        "Redirects the design to rate tiers, draw terms, and clawback windows as the real decisions here.",
        "Treats draws as the central mechanic of this plan rather than a ramp footnote.",
        "Flags recovery of a negative draw balance from a final paycheck as a legal-counsel item.",
        "Notes that negative-balance treatment at separation is state-law and contract dependent.",
        "Requires the recovery schedule, the separation treatment, and the clawback conditions all to appear in the written plan.",
        "Treats first-year attrition as a cost input the plan must be priced against.",
        "Warns that an aggressive early clawback accelerates the very washout it is meant to buffer.",
        "Does not present B2B SaaS benchmark OTE or quota figures as targets for this plan."
      ]
    }
  ],
  "trigger_queries": [
    { "query": "Design next year's compensation plans for our 20-rep sales org", "should_trigger": true },
    { "query": "How should we pay our AEs?", "should_trigger": true },
    { "query": "What's a reasonable base/variable split for an enterprise account executive?", "should_trigger": true },
    { "query": "Our reps blew past quota and the commission spend wrecked the budget", "should_trigger": true },
    { "query": "Should we cap commissions above 150% of quota?", "should_trigger": true },
    { "query": "Draft an SDR commission plan for a 6-person team", "should_trigger": true },
    { "query": "We want to run a SPIF next month for the new product line", "should_trigger": true },
    { "query": "What accelerator rate should we use above 100% attainment?", "should_trigger": true },
    { "query": "Is a decelerator below 60% attainment a bad idea?", "should_trigger": true },
    { "query": "Help me set OTE and the commission rate for a mid-market AE", "should_trigger": true },
    { "query": "Our CSMs are asking to be paid on expansion revenue", "should_trigger": true },
    { "query": "How do we split credit between the AE and the solutions engineer?", "should_trigger": true },
    { "query": "Two reps worked the same deal and both want the commission", "should_trigger": true },
    { "query": "Should new hires get a recoverable or non-recoverable draw during ramp?", "should_trigger": true },
    { "query": "We're moving to usage-based pricing and I don't know what to pay reps on anymore", "should_trigger": true },
    { "query": "Write the clawback language for our commission plan", "should_trigger": true },
    { "query": "Our sales managers are on a flat bonus and I think it's wrong", "should_trigger": true },
    { "query": "What should a BDR's variable pay look like versus an inbound SDR?", "should_trigger": true },
    { "query": "Nobody on the team can explain how their own commission is calculated", "should_trigger": true },
    { "query": "We pay our SDRs per meeting booked and the meetings are garbage", "should_trigger": true },
    { "query": "Reps are hitting quota but our compensation cost of sales is way above where finance wants it", "should_trigger": true },
    { "query": "Can we change the plan mid-year to push the new product?", "should_trigger": true },
    { "query": "Build a rate table for our AE plan", "should_trigger": true },
    { "query": "How much of a rep's pay should be at risk?", "should_trigger": true },
    { "query": "commission plan design", "should_trigger": true },
    { "query": "I inherited a comp plan nobody can explain and I need to rebuild it", "should_trigger": true },
    { "query": "Our top rep stopped selling in December and I think the plan caused it", "should_trigger": true },
    { "query": "What's the right way to pay a hunter versus a farmer?", "should_trigger": true },
    { "query": "Finance wants to know what the sales plan costs if everyone overachieves", "should_trigger": true },
    { "query": "We need signed commission agreements in place before January 1", "should_trigger": true },
    { "query": "Should overlay specialists get double credit?", "should_trigger": true },
    { "query": "Set up the incentive structure for our new outbound team", "should_trigger": true },
    { "query": "How many metrics should sit in a rep's variable pay?", "should_trigger": true },
    { "query": "We have five things on the AE scorecard and the reps are confused", "should_trigger": true },
    { "query": "Our solar reps are on straight commission with draws and we keep having payout fights", "should_trigger": true },
    { "query": "Design the variable pay for a first-line sales manager", "should_trigger": true },
    { "query": "Is 70/30 right for a sales engineer?", "should_trigger": true },
    { "query": "quarterly spiff every quarter, is that fine?", "should_trigger": true },
    { "query": "How do I stop reps sandbagging deals into the bonus window?", "should_trigger": true },
    { "query": "Our insurance agents want higher renewal commission rates", "should_trigger": true },
    { "query": "What happens to a rep's commission on deals that close after they resign?", "should_trigger": true },
    { "query": "I want to model what we'd pay out if 20% of the team lands above 150%", "should_trigger": true },
    { "query": "Should GRR and NRR both be in the CS comp plan?", "should_trigger": true },
    { "query": "We're paying the same plan to SMB and enterprise AEs and it isn't working", "should_trigger": true },
    { "query": "how to structure sales bonuses so people don't game them", "should_trigger": true },
    { "query": "Our plan says uncapped but finance wants to stop paying past a point", "should_trigger": true },
    { "query": "What do we owe the rep who sourced the deal but left before it closed?", "should_trigger": true },
    { "query": "Put together the pay structure for the new sales org we're standing up", "should_trigger": true },
    { "query": "The commission disputes are eating my whole week", "should_trigger": true },
    { "query": "How much quota should each AE carry next year?", "should_trigger": false },
    { "query": "Build a ramped rep equivalent capacity model for next year's hiring plan", "should_trigger": false },
    { "query": "What over-assignment cushion should we put on top of the team number?", "should_trigger": false },
    { "query": "How do I allocate quota fairly across territories?", "should_trigger": false },
    { "query": "What ramp relief should a new AE get in their first two quarters?", "should_trigger": false },
    { "query": "Should we split SDRs from AEs or run full-cycle reps?", "should_trigger": false },
    { "query": "How many reps should report to one first-line manager?", "should_trigger": false },
    { "query": "Pods versus assembly line for a 30-person sales team", "should_trigger": false },
    { "query": "Should we create a separate farmer team that owns renewals?", "should_trigger": false },
    { "query": "We had 4x pipeline coverage and still missed, what went wrong?", "should_trigger": false },
    { "query": "How much new pipeline do we need to create this quarter?", "should_trigger": false },
    { "query": "Write the interview loop for hiring our first two AEs", "should_trigger": false },
    { "query": "Build a 30-60-90 ramp plan for a new SDR", "should_trigger": false },
    { "query": "What should our sales hiring scorecard measure?", "should_trigger": false },
    { "query": "I got an AE offer at a Series B, how do I evaluate it?", "should_trigger": false },
    { "query": "How do I get promoted from SDR to AE?", "should_trigger": false },
    { "query": "Should we go product-led or sales-led for this product?", "should_trigger": false },
    { "query": "When should we hire our first salesperson?", "should_trigger": false },
    { "query": "Estimate the TAM for our category", "should_trigger": false },
    { "query": "Define our ideal customer profile", "should_trigger": false },
    { "query": "Build an account fit score from last year's closed-won deals", "should_trigger": false },
    { "query": "Where should the cutoff between Tier 1 and Tier 2 accounts sit?", "should_trigger": false },
    { "query": "Score this opportunity against MEDDPICC", "should_trigger": false },
    { "query": "Who is the real economic buyer on this deal?", "should_trigger": false },
    { "query": "Scan these call notes for red flags", "should_trigger": false },
    { "query": "Build the ROI case for this deal", "should_trigger": false },
    { "query": "The buyer wants 20% off, what do I trade for it?", "should_trigger": false },
    { "query": "Write a rebuttal for \"it's too expensive\"", "should_trigger": false },
    { "query": "Write a cold call opener for a VP of Engineering", "should_trigger": false },
    { "query": "Why are my cold emails landing in spam?", "should_trigger": false },
    { "query": "Generate 10 subject line variants for this campaign", "should_trigger": false },
    { "query": "Design a 12-touch outbound cadence", "should_trigger": false },
    { "query": "Find a personalization angle for this prospect", "should_trigger": false },
    { "query": "Write the follow-up recap email from this meeting", "should_trigger": false },
    { "query": "Score this call transcript against a rubric", "should_trigger": false },
    { "query": "What discovery questions should I ask on the first call?", "should_trigger": false },
    { "query": "Which sales podcasts should I be listening to?", "should_trigger": false },
    { "query": "Where do I even start with our sales function?", "should_trigger": false },
    { "query": "Run a comp analysis on our three closest competitors", "should_trigger": false },
    { "query": "Compare our pricing against the competition", "should_trigger": false },
    { "query": "Design the equity refresh grant policy for engineering", "should_trigger": false },
    { "query": "Build a salary band structure for our engineering levels", "should_trigger": false },
    { "query": "What should we pay a senior backend engineer in Berlin?", "should_trigger": false },
    { "query": "Write our parental leave and benefits policy", "should_trigger": false },
    { "query": "Set up payroll for our new Brazil entity", "should_trigger": false },
    { "query": "Design the annual performance review calibration process", "should_trigger": false },
    { "query": "Build an employee referral bonus program", "should_trigger": false },
    { "query": "What's a fair profit-sharing formula for the whole company?", "should_trigger": false },
    { "query": "Draft the executive bonus plan for our CFO and CTO", "should_trigger": false }
  ]
}

# Worked accelerator curve

A complete curve for a new-logo AE plan, expressed entirely in ratios so it transfers across markets and price levels. Substitute the org's own quota and OTE to price it.

## Assumptions

- Pay mix 50/50 (variable share of OTE = 0.5).
- Quota:OTE ratio 5x (from the quota plan - see mbfinotti/sales-skills@sales-quota-setting).
- The identity: 50/50 mix at 5x quota:OTE implies roughly a 10% blended commission rate on new business, and compensation cost of sales lands near 20% of new ARR.
- Fix any two of {mix, quota:OTE, rate} and the third is determined.
- Accelerator bound: accelerated rate ≤ 1 ÷ 0.5 = 2.0x the base rate. Anything above 2x on a 50/50 plan pays out faster than the revenue it rewards.

## The rate table (marginal)

| Attainment band                       | Rate multiplier    | Rationale                                                                   |
| ------------------------------------- | ------------------ | --------------------------------------------------------------------------- |
| 0-40%                                 | 0.5x (decelerated) | Below the floor the plan stops pro-rating; pairs with the accelerator below |
| 40-100%                               | 1.0x               | The base commission rate                                                    |
| 100-130%                              | 1.5x               | First accelerator band                                                      |
| above 130%                            | 2.0x               | Second band, at the bound exactly                                           |
| any single deal > 25% of annual quota | windfall review    | Manual review clause instead of a cap                                       |

Each band's rate applies **only to attainment inside that band** (marginal application).

The decelerator here is a deliberate choice, not a default: it funds the 1.5x/2.0x bands. Running the same accelerators with no decelerator is also legitimate:

- **Majority modern-SaaS position:** dropping decelerators as demoralizing.
- **Minority position:** keeping them for behavior control.

Choose explicitly and record why.

## Worked payout at 120% attainment

Payout as a share of target variable pay:

- 0-40% band: 40 × 0.5x = 20 points
- 40-100% band: 60 × 1.0x = 60 points
- 100-120% band: 20 × 1.5x = 30 points
- **Total: 110% of target variable** for 120% attainment.

The rep can reconstruct this on a napkin - that reconstructability is the design goal, not a side effect. Line of sight survives because each band is independent.

## Cost model before publishing

Model at least these scenarios against last cycle's actual attainment distribution before the rate table ships:

1. **Expected case:** last cycle's distribution replayed under the new table - total payout vs the current plan's actual payout.
2. **High-attainment case:** 20% of the team lands above 150%. On the table above, a rep at 150% earns 20 + 60 + 45 + 40 = 165% of target variable. If that outcome across a fifth of the team breaks the budget, fix the accelerator _rate_ now - never bolt on a cap after publication.
3. **Windfall case:** one outsized deal per quarter routed through the review clause - confirm the clause's trigger threshold catches it.

Survey grounding:

- Uncapped accelerators are the overwhelming B2B SaaS norm (82% of companies in ICONIQ Growth's May 2023 survey of 236 GTM executives), typically boosting a top performer's payout 20-30% above quota - the modeling above is what makes uncapped affordable.
- WorldatWork's separate "3x rule" sizes total upside: a 90th-percentile performer should earn roughly 3x target incentive, anchored to the labor market's own 90th-percentile pay (some industries 2x, some 4x).

## Negative example 1 - the cumulative table

Same bands, but crossing 100% reprices **all prior attainment** at 1.5x. At 99% the rep holds 79 points; at 101% they hold ~121 - a 2-point attainment move triples the marginal payout.

Reps hold deals at quarter-end to time the cliff, and mid-period the rep cannot compute what a deal is worth. This is the named source of the cliff effects and line-of-sight erosion the marginal table avoids.

## Negative example 2 - the cap

Replacing the windfall clause with a hard payout cap (e.g. nothing above 130%) tells the best rep on the team to stop selling in the strongest month of their year, and deals slip to next period at the rep's convenience, not the company's. Retroactively capping payouts that the plan document called "uncapped" has produced actual litigation and settlements - _Comin and Briggs v. IBM_ (N.D. Cal.) settled for $4.75M in 2023 on exactly this fact pattern - treat cap language as a counsel-gate item at step 9, not a budgeting lever.

## Adapting the shape

- **Higher variable share** tightens the bound: at 60% variable, the ceiling is 1 ÷ 0.6 ≈ 1.67x - the accelerator must be flatter.
- **Enterprise plans** (fewer, larger deals) lower the windfall threshold and lean harder on the review clause, since one deal can be half a year's quota.
- **Gates and kickers** (e.g. a strategic-product attach goal) can frame the same incentive as a carrot (richer acceleration if hit) or a stick (no acceleration if missed). Loss-framing typically produces the stronger behavioral response (WorldatWork), but every gate spends the clarity budget of the rule of three.

# Governance, legal gates, and market context

## Governance detail

**Ownership by scale.** Sales leadership owns comp design early. Ownership shifts to RevOps/Sales Ops as the org scales, with HR/Total Rewards supplying market benchmark data for OTE levels (QuotaPath 2023 survey).

Alexander Group survey data on the split:

- ~40% of companies: sales management/sales ops runs the redesign.
- ~28% of companies: a cross-functional design task force.
- Roughly half: require top-leader (CEO/COO/president) sign-off.

The scaled flow, in order: RevOps-led design, finance validation, executive sign-off.

**Steering-committee model (WorldatWork).** Three teams across six phases (plan, design, implement, administer, assess, manage):

- **Steering committee** (sales, RevOps, HR, finance): confirms the pay-for-performance philosophy and resolves cross-functional conflicts before design starts.
- **Design team:** defines structure and measures.
- **Administration team:** operationalizes tracking and owns dispute/exception handling with defined escalation paths, never case-by-case improvisation.

**Cadence.** Annual review aligned to the fiscal year. Plans carry published start and end dates, never left open-ended (Cichelli). More frequent major changes create confusion and instability, and any mid-cycle change to pay opportunities is a governance exception requiring its own sign-off.

**Back-testing and communication load.** Test the new plan against actual historical per-rep performance before rollout - it catches unintended over/underpayment and builds committee trust. Roughly 60% of reps take 3-6 months to fully understand a new plan; over-invest in rep-facing plan documentation and explanation at launch.

**Deliberate evolution is legitimate.** The annual-stability rule is a floor, not a freeze. A documented counter-example, HubSpot's early sales organization under Mark Roberge, ran three successive AE plans as deliberate strategy shifts:

1. Pure upfront payment with a clawback (churn exploded).
2. Rates tiered by each rep's customer-retention quartile.
3. The same rate, with the payout itself staggered over the customer's first year contingent on retention.

The lesson: the comp plan is a primary lever for executing a strategy change. Evolve it deliberately at the fiscal boundary, not reflexively for stability's own sake.

## Legal gates - check with counsel, never resolve in-plan

This is general information for flagging risk, not legal advice. Every item below is a gate:

- Identify whether it applies to the org's jurisdictions and rep population.
- Flag it to counsel.
- Record counsel's answer in the plan file.

Statute details and thresholds change frequently - verify current status.

1. **Written signed commission agreements.** Several US states mandate a written agreement describing how commissions are computed and paid, signed by the employee (California Labor Code 2751; New York Labor Law 191 for commission salespersons). Missing paperwork forfeits the employer's presumption on any unwritten deduction or forfeiture term.
2. **Clawback enforceability - earned vs unearned.** Once a commission is _earned_, it is generally a wage and clawing it back is an unlawful deduction; advances and unearned commissions can be recovered only when the written plan clearly defines the earning event. Defensible clawbacks are narrowly scoped (churn or non-payment within a stated window) and never exercised under "sole discretion" language.
3. **Post-termination commissions - the procuring-cause doctrine.** When the plan is silent, a rep who set the sale in motion can be owed the commission even after leaving; an "at-will" designation alone does not displace this. Only explicit plan language conditioning post-termination commissions does.
4. **Damages multipliers.** Multiple states treat unpaid commissions as wages with statutory multipliers (double, treble) plus fees - the cost of a commission dispute is a multiple of the commission.
5. **Retroactive caps.** Capping payouts after deals closed, under a plan document that said "uncapped", has been litigated: _Comin and Briggs v. IBM_ (N.D. Cal., 3:19-cv-07261) settled for $4.75M in 2023 over California reps whose commissions were capped after large deals had already closed, and _Vinson v. IBM_ (M.D.N.C.) separately allowed a claim over commissions capped at 400% of quota after they were earned - cap language and any post-hoc payout adjustment are counsel items.
6. **Pay transparency.** A large and growing set of US states require the pay range in job postings; for sales roles the good-faith range should reflect full OTE, not base alone. Coverage thresholds vary by state and remote roles are generally in scope; the cited practical approach is complying with the strictest applicable state. Transparency also raises internal-equity scrutiny - existing reps see what new-hire postings imply.
7. **Overtime exemption for inside sales.** The outside-sales exemption doesn't cover phone/internet selling, and the retail-establishment commissioned exemption rarely applies to B2B SaaS - many SaaS inside-sales reps are non-exempt by default, a widely under-appreciated gap since commission-heavy pay does not itself imply exemption.
8. **Commission-expense accounting (ASC 606 / ASC 340-40).** Incremental costs to obtain a contract are capitalized and amortized over the expected benefit period _including anticipated renewals_ - a baseline audit/IPO-diligence expectation. Renewal commissions paid at a lower rate than initial-sale commissions is itself evidence the initial commission covered the whole relationship.
9. **UK/EU commercial agents.** Termination indemnity/compensation rules protect self-employed agents selling _goods_; they typically don't reach software/services - but confirm per arrangement.
10. **B2C-specific.** Draw recovery from final paychecks (negative balances at separation) is state-law- and contract-dependent, and a recurring dispute pattern in solar and auto.

## Market shifts, 2023-2026 (dated - refresh before relying on)

- **Efficiency-era correction.** Post-2021: quotas rose, AE ramps lengthened (Bridge Group: 4.3 → 5.3 months), pay mix drifted slightly toward variable in mid-market/enterprise, and 4x-6x quota:OTE discipline returned. Treat any benchmark dated 2021-2022 as stale.
- **Usage-based pricing breaks booking-centric comp.** A majority of SaaS companies now run some usage-based pricing (Pavilion cites ~61%, 2025), so revenue materializes long after signing.

  Competing designs, with **no settled best practice**:
  - Territory profiles weighting bookings vs consumption by account maturity.
  - Consumption run-rate as the paid measure.
  - Hybrid base-plus-overage crediting.
  - Multi-year consumption-tied comp.

  Traditionalist warning: each risks turning comp into an annuity that stops tracking new selling effort. Present the camps, don't pick one as industry standard.

- **AI compression of the SDR role.** Prospecting automation is shifting SDR comp toward qualified-opportunity and sourced-pipeline quality gates over raw activity - and reshaping ICM tooling itself (AI plan optimization, anomaly detection).
- **Transparency pressure.** Posted OTE ranges compress the informational advantage that used to justify wide pay-mix variance between similar companies.

## ICM tooling - integration note

**What the tools automate:**

- Commission calculation.
- Crediting.
- Dispute/inquiry workflows.
- Rep-facing statements.
- ASC 340-40 amortization schedules.
- Plan modeling/back-testing.

**What no tool substitutes for:**

- Measure selection.
- Pay mix.
- The quota:OTE ratio.
- Accelerator break points.
- Crediting rules.
- The strategic steering of the plan - the judgment in SKILL.md.

Plan _management_ is the differentiator once design is done, tracked through standing health signals:

- Attainment distribution.
- Payout volatility.
- Exception volume.
- Dispute counts.
- Time-to-close on commissions.

Vendor landscape by buyer size (citation only; analyst placements and per-seat prices below are secondary-relayed and change - verify before quoting):

- **Lightweight/SMB tier:** QuotaPath, Visdum, Palette, Core Commissions.
- **Mid-market:** Everstage, CaptivateIQ, Performio.
- **Enterprise suites:** Xactly, Varicent, SAP SuccessFactors Incentive Management, Oracle, beqom, Forma.ai.
- **CRM-native:** Salesforce Spiff/Incentive Compensation Management.
- **Planning-led adjuncts:** Anaplan, Pigment, usually paired with a dedicated comp engine.

Enterprise pricing in this market is not publicly documented - never quote a number for it.

# Role-plan matrix

One plan per role shape - never one plan stretched across roles with different influence over the sale. Pay mixes below are published-benchmark ranges to _calibrate_ an influence-derived mix, not to copy (see SKILL.md step 3).

## The matrix

| Role                    | Typical pay mix (base/variable) | Paid measures (max 3)                                    | Core mechanics                                                       | Crediting                                  |
| ----------------------- | ------------------------------- | -------------------------------------------------------- | -------------------------------------------------------------------- | ------------------------------------------ |
| SDR (inbound)           | 65/35 to 70/30                  | Qualified opportunities (focus); held meetings secondary | Shorter ramp than AE; SPIF-prone; monthly/quarterly payout           | Sourced-credit to SDR on closed-won kicker |
| BDR (outbound)          | 55/45 to 60/40                  | Qualified opportunities; sourced pipeline                | Higher variable than inbound - the rep creates the opportunity       | Same as SDR                                |
| AE (SMB/velocity)       | 50/50 to 60/40                  | New ARR (focus)                                          | Accelerator curve; shorter ramp                                      | Standard single credit                     |
| AE (mid-market)         | 50/50 to 55/45                  | New ARR (focus); optional strategic mix measure          | Accelerator curve                                                    | Standard single credit                     |
| AE (enterprise)         | 55/45 to 60/40                  | New ARR (focus)                                          | Windfall clause matters most here; longest ramp                      | Split rules for multi-territory deals      |
| First-line manager      | ~60/40                          | Team attainment (focus); MBOs allowed                    | Collective or individual override; over-assigned team quota          | Rollup, no individual deal credit          |
| SE / overlay specialist | 70/30 to 85/15                  | Supported team's product quota                           | 70-80% of variable on the supported team, 20-30% on the broader team | **Double credit** with the primary rep     |
| AM (expansion)          | 60/40 to 65/35                  | NRR/expansion (focus); GRR gate                          | GRR floor gates expansion pay                                        | Credit on expansion, not renewal-only      |
| CSM (retention)         | 70/30 to 80/20                  | GRR (focus); NRR bonus tier                              | Never paid on new-logo bookings                                      | Book-of-business, not per-deal             |

## SDR/BDR design notes

- Pay on **qualified opportunities or held/accepted meetings, never booked meetings** - pay-on-booking pays for spam and pollutes the AE pipeline with meetings booked to trigger the payout. A hybrid weighting more on qualified opportunities than on appointments is a recommended middle ground (OpenView: 40% appointments / 60% qualified opportunities).
- A sourced-pipeline variant (used by roughly a third of SaaS startups) requires the SDR to source ~10x-15x their own OTE in pipeline instead of counting SQLs.
- SDR turnover is structurally high (Bridge Group: median annual turnover 32-40%, median tenure 14-18 months) - a direct reason SDR plans carry a higher, more predictable base share than AE plans, and why SDR ramp (2-3 months) is much shorter than AE ramp.
- AI-driven prospecting automation is compressing the raw-activity side of the role; comp design is shifting further toward qualified-opportunity quality gates - reinforcing, not changing, the pay-on-qualified rule.

## Manager design notes

- **Collective override:** manager paid on aggregate team attainment (a share of team revenue, gated on team quota).
- **Individual override:** a small share of each rep's own payout summed upward.

Collective is simpler and keeps the manager coaching the whole team.

- Team quota rollup includes deliberate over-assignment - the sum of rep quotas exceeds the manager's number, buffering expected attrition and misses.
- Manager plans are the standing exception to the anti-MBO rule: a manager's job genuinely includes non-output responsibilities.

## Overlay design notes

- The dominant crediting rule is **double credit** - both the primary rep and the specialist credited fully. The simpler "no overlays, no double credit" preference (Alexander Group's stated default) concedes that technical selling genuinely requires specialists, for whom double credit is the accepted answer.
- Tie overlay quota to the supported team's product quota; weighting most of the overlay's variable there and the remainder on the broader team keeps the specialist coordinating rather than optimizing a narrow assignment.

## CSM/AM design notes

- Keep **GRR and NRR as two separate paid metrics** - a single blended number lets one large expansion mask real churn elsewhere in the same book. A GRR floor (e.g. 90%) gates whether expansion pay releases at all.
- One cited weighting bridges the two: 75% of incentive weight on churn mitigation, 25% on expansion.
- Rollout practice: track NRR/GRR per individual for two full quarters with no variable attached to establish an honest baseline, then set targets as a 5-10% improvement over it.

## Hunter/farmer crediting

When the org splits new-logo from expansion ownership (the split decision is mbfinotti/sales-skills@sales-org-structure's): cap the hunter's credited tail - commonly 12 months - so the hunter neither loses in-flight credit nor slow-rolls the handover, and run the farmer base-heavy on retention/expansion. Expect the hunter side's turnover to run structurally higher; that asymmetry is a comp-cost input, not a management failure.

## Draws and ramp

- **Non-recoverable draw** (an advance not repaid from later commission) is the standard ramp-support mechanic - it cuts early-tenure anxiety and attrition without changing post-ramp expectations. Recoverable draws create negative-balance disputes at separation.
- The ramp-relief _quota_ schedule beside the draw belongs to mbfinotti/sales-skills@sales-quota-setting.
- Written multi-rep split rules before any deal closes; territory and named-account crediting disputes are a leading source of plan exceptions.

## Benchmark citations (calibration only - never design targets)

US B2B SaaS reference points, all secondary-relayed survey data; verify currency before quoting in a deliverable:

- Bridge Group 2026 AE data: median OTE $200K, median quota $960K, a 4.6x quota:OTE ratio.
- Bridge Group 2025 SDR data: median OTE $80K ($55K base / $25K variable, ~69/31).
- Bridge Group 2024 AE edition: median OTE $190K at 53:47, commission ~11.5% of ACV at quota.
- Quota:OTE band: 4x-6x with 5x as the steady-state default; SMB/inbound-heavy 3x-4x, enterprise 5x+ (SaaStr, ICONIQ, multiple vendor surveys).
- Role OTE ranges (Bridge Group, RepVue, WorldatWork, various):
  - SDR: ~$76K-80K.
  - SMB AE: $140K-200K.
  - Mid-market AE: $180K-250K.
  - Enterprise AE: $240K-320K.
  - First-line manager: $200K-280K OTE at 60/40.
  - CSM: ~$140K OTE at ~75/25.
  - SE: median ~$175K at 70/30, with an AE:SE support ratio around 1.44:1.
- SDR component economics (ICONIQ, vendor sources):
  - Per-qualified-meeting bonuses: $20-50.
  - Per-accepted-opportunity: $100-250.
  - Closed-won kickers: 1-3% of SDR-sourced revenue.
  - Enterprise SDRs book ~5 SQLs/month vs ~20 for mid-market.
- Europe/Canada comp runs roughly 20% below equivalent US roles (ICONIQ) - a benchmarking adjustment, not a legal one.
- Attainment equilibrium (Bridge Group): the classic well-calibrated norm was roughly two-thirds of reps hitting quota, with a healthy full distribution of:
  - ~60% of reps at 50-100% attainment.
  - ~15% above 100%.
  - ~25% below 50%.

  Attainment has structurally declined since 2022: re-baseline against current data via mbfinotti/sales-skills@sales-quota-setting before grading a plan on the folk figure.

Commission-heavy B2C reference points (directional, uneven trade-source rigor):

- **Insurance:** commissions 10-20% of first-year P&C premium plus 2-15% renewals.
- **Solar:** 5-20% or flat per-sale/per-kW, heavy draw usage.
- **Auto:** ~20-25% of front-end gross plus back-end products and manufacturer SPIFFs.
- **Real estate:** income spread is extreme by tenure (NAR 2026: newest agents' median income is a small fraction of 16+-year agents').

Insurance three-year turnover ~89% and auto annual turnover 40-70% are the attrition figures behind the B2C design warnings in SKILL.md.

---
name: sales-comp-design
description: Designs the sales compensation plan structure - pay mix (base/variable split) set by role influence, performance measures under the rule of three, accelerator and decelerator curves, SPIF overlays, draws, and role plans for SDR, AE, manager, overlay, and CSM seats. A macro annual exercise for sales leadership, RevOps, and finance, covering B2B SaaS and commission-heavy B2C. Use whenever the user mentions commission plans, OTE, accelerators, clawbacks, SPIFs, capping commissions, or "how should we pay our reps", even without the words comp design. Do NOT use for deriving the quota the plan pays against (mbfinotti/sales-skills@sales-quota-setting) or structuring the org (mbfinotti/sales-skills@sales-org-structure).
license: MIT
metadata:
  author: Maya-Beth Finotti
  version: "1.3.2"
---

# Sales Compensation Plan Design

You are a compensation-design advisor to sales leadership, RevOps, and finance. Run the annual comp-design exercise: set the governance spine, check job design, derive pay mix from role influence, pick the paid measures, shape the payout curve, write the role plans and crediting rules, back-test, gate on legal review, then ship signed plan documents.

The comp plan is a virtual supervisor - it tells the sales force what's important, every day (Cichelli). A badly designed plan doesn't fail to work; it works against its owner, rewarding exactly what its mechanics pay for.

Stay at plan-structure altitude:

- Deriving the quota the plan pays against: mbfinotti/sales-skills@sales-quota-setting.
- Designing the org whose seats these plans map to: mbfinotti/sales-skills@sales-org-structure.

## Invocation examples

- _"Design next year's comp plans for our 20-rep sales org."_ - full workflow, steps 1-10.
- _"Reps blew past quota and the accelerator blew up finance's budget."_ - curve entry: steps 5 and 9 against the shipped plan; the cost was never modeled.
- _"Should we split credit between the AE and the SE on this deal?"_ - crediting entry: step 6. Write the rule before the next deal closes, never after this one.
- _"Our Q3 SPIF worked - can we run it every quarter?"_ - the SPIF-to-permanent-pay trap; step 7.

## Interview

- One question per message.
- Multiple-choice where offered.
- Skip what prior context already answers.

1. Scope: (a) all plans for the next fiscal year, (b) one role's plan, (c) one mechanic - accelerator, SPIF, crediting rule, draw, (d) diagnosing a plan that misfires?
2. Motion and pricing: B2B, B2C, or mixed; sales-led, PLG, or hybrid; subscription or usage-based pricing?
3. Roles in scope: AE only, or SDR/BDR, manager, overlay (SE/specialist), CSM/AM too? Any blended jobs mixing selling and non-selling duties?
4. Does a quota plan exist - per-rep quota and the quota:OTE ratio? If not, run mbfinotti/sales-skills@sales-quota-setting first: this skill prices a quota, it never sets one.
5. Current state: (a) greenfield first plan, (b) standing plan up for annual redesign, (c) inherited plan nobody can fully explain?
6. Last cycle's symptoms: attainment distribution shape, payout-vs-budget surprises, dispute and exception volume, share of reps who can explain their own pay?
7. Who designs and who signs: sales leadership alone, RevOps-led, finance, HR/total rewards? Is there a steering committee?
8. Which jurisdictions do reps sit in? This decides the counsel gates in step 9 - flag it for legal review, never resolve it in-plan.
9. By what date must signed plans land relative to fiscal-year start? Plans carry published start and end dates matching the fiscal year.
10. One-off or compounding: (a) fix this cycle's plan, (b) build the standing redesign process the org reruns every year?
11. Effort ceiling: analyst hours for modeling and back-testing, per-rep payout history available, and the political capital you can spend changing anyone's pay?

Re-rank the ladder below against answers 9-11, and say which answer moved what:

- A hard date close to fiscal start demotes anything needing new data collection.
- A compounding mandate (10b) promotes the standing program despite its losing ratio.
- A low effort ceiling deletes the standing program outright - half-maintained plan telemetry misprices the plan it was built to watch.

## Choose the design depth

- efficiency: `targeted tune > full redesign > standing program`
- value: `standing program > full redesign > targeted tune`
- effort: `standing program (a standing job) > full redesign (a planning cycle) > targeted tune (days)`
- compliance cost: `targeted tune mid-cycle > full redesign == standing program` - a mid-cycle pay change is a governance exception needing re-signed agreements and is a named demotivation and turnover cause; an annual redesign carries sign-off as routine.

1. **Targeted tune.** One mechanic changed inside the standing structure - an accelerator rate, a SPIF, one role's measures - back-tested against last cycle's actual payout data, shipped at the annual boundary.
2. **Full redesign.** The complete workflow below, at annual cadence.
3. **Standing program.** Full redesign plus a steering committee, plan-health telemetry (attainment distribution, exception and dispute counts, payout vs model), and a maintained back-test model rerun every cycle.

- **Default rung:** targeted tune, when the structure is sound and one mechanic misfires.
- **Promote to full redesign** when strategy shifted (new motion, usage-based pricing, a role split), the attainment distribution is broken, or reps can't explain their pay.
- **What this order starves:** the standing program - highest value, loses every ratio round.
- **Promote to standing program anyway** once comp ownership has shifted from sales leadership to RevOps (multiple plans, material exception volume): at that scale only standing telemetry catches a plan drifting between annual passes.

**Copying a benchmark table or a competitor's plan wholesale is deleted, not ranked.** Pay mix follows the role's influence in the org's motion, not convention - "our AEs are 50/50 because that's what we've always done" is contingent pay, not incentive.

This ordering is a default, not a law - re-rank against what you know about the user:

- An org already running comp tooling with a dedicated analyst gets the standing program near-free.
- A founder writing plan number one needs steps 3-5 and a signature, little else.

## Brainstorm before designing

Comp plans harden on signature - mid-year changes are governance exceptions, so assumptions must surface before the plan ships, not after.

1. After the interview, present 2-3 candidate plan structures (differing in pay mix, measures, and curve shape - not just parameter values) with trade-offs and one explicit recommendation.
2. Ask remaining clarifying questions one at a time, multiple-choice where possible.
3. Get explicit approval on the structure before writing any mechanics.
4. Build the plan section by section, validating each with the user before the next. Pay mix set wrong invalidates every mechanic priced on top of it:
   1. Governance and job design.
   2. Pay mix and economic frame.
   3. Measures.
   4. Curve.
   5. Role plans and crediting.
   6. SPIF and draw layer.
   7. Back-test.
   8. Legal gate.
   9. Documentation.
5. Gate finalization on approval of the assembled plan.

If your harness has persistent memory, store the approved decisions so next cycle's redesign and any mid-cycle exception starts from the recorded plan, not from scratch:

- Pay mix per role.
- Measures.
- Curve parameters.
- Crediting rules.
- Sign-off chain.

## Workflow

1. **Set the governance spine.** Name who designs, who validates the cost (finance), and who signs, before touching numbers.
   - **Early stage:** sales leadership designs, the CEO signs.
   - **Scaled:** RevOps-led design, finance validation, executive sign-off, with a cross-functional steering committee resolving conflicts before design work starts.

   Detail: [governance-legal-and-market.md](./references/governance-legal-and-market.md).

2. **Check job design before plan design.** Job-design errors are the number-one cited cause of plan failure (Cichelli): a blended job stacking selling and non-selling duties forces the plan to measure all of it. If a role can't be captured in one financial measure plus at most two supporting measures, narrow the job - never add a fourth line to the plan. Selling-time check: reps should spend 35-45% of their time actually selling; below 30% is a job-design failure surfacing as comp complexity.
3. **Derive pay mix from influence.** The less a rep's own actions determine the outcome, the more pay belongs in base.
   - **High-influence roles** (outbound, new-logo, enterprise closing): higher variable share.
   - **PLG-assist, expansion, and renewal roles:** base-heavy.

   This is a derivation rule, not a ranked menu: ranking pay mixes would be false precision, since the mix follows each role's influence for structural reasons.

   Lock the economic frame next: pay mix, quota:OTE ratio (the quota plan's output), and commission rate are one system - fix two and the third is determined. Typical splits by role and the identity mechanics: [role-plan-matrix.md](./references/role-plan-matrix.md).

4. **Pick the measures - rule of three.** No more than three measures per plan, with at least one financial/output measure as the focus.
   - **Do:** prefer output measures the rep controls.
   - **Don't:** use corporate or compliance measures.
   - **Avoid:** activity measures and MBOs in direct-seller plans (MBOs are legitimate in manager and CSM plans, where the job genuinely includes non-output work).

   Every added threshold, modifier, or crediting rule spends the plan's clarity budget: line of sight, the rep's straight line from action to payout, is what stacked mechanics erode.

   If pricing is usage-based, the booking event stops being a cleanly payable measure: revenue lands over months, and there is no settled industry answer yet. Competing designs: [governance-legal-and-market.md](./references/governance-legal-and-market.md).

5. **Shape the payout curve.**
   - **Rate bands:** marginal, never cumulative - cumulative repricing produces cliffs a rep can't reconstruct.
   - **Accelerator:** above 100% attainment, commonly 1.5x-2x the base rate, bounded so the accelerated rate never exceeds 1 ÷ (variable share of OTE).
   - **Decelerator:** below a threshold, matched with the accelerator - it funds the accelerator's richer rate, and one without the other reads as pure downside. Whether to run a decelerator at all is a live practitioner disagreement, not settled practice: make it an explicit choice either way.
   - **Never cap the payout:** a cap tells the team's best rep to stop selling. Control cost in the modeled accelerator rate plus a windfall-review clause for outsized single deals.

   Model the cost before publishing: what does the plan pay if 20% of the team lands above 150%? Worked curve, cost model, and negative examples: [accelerator-curve-example.md](./references/accelerator-curve-example.md).

6. **Write the role plans and crediting rules.**
   - **SDR paid measure:** qualified opportunities > held meetings. Pay-on-booked-meetings is deleted, not demoted: it pays for spam and pollutes the AE pipeline.
   - **Managers:** rollup on team attainment via a collective or individual override, with deliberate over-assignment buffering attrition.
   - **Overlays (SE/specialist):** double credit is the accepted answer despite the simpler-is-better default, weighted mostly on the supported team's quota.
   - **CSM/AM:** GRR and NRR as separate paid metrics with a GRR floor gating expansion pay. Never pay expansion while churn hides elsewhere in the same book.
   - **Hunter/farmer pay:** cap the hunter's credited tail (commonly 12 months) and run the farmer base-heavy. The split decision itself is mbfinotti/sales-skills@sales-org-structure's.

   Every multi-rep crediting scenario needs a written split rule before the deal closes, never negotiated after. Full matrix: [role-plan-matrix.md](./references/role-plan-matrix.md).

7. **Layer SPIFs deliberately, or not at all.** A SPIF is a time-boxed overlay for one incremental behavior:
   - Weeks, not quarters.
   - A handful per year, with deliberate gaps.
   - Outcome metrics, never activity counts.
   - Sized against the standing commissions budget, so it's self-funding.

   For a mid-cycle behavior push: `SPIF > mid-year plan change` - the SPIF expires by design; the plan change is a governance exception and a named turnover cause.

   A SPIF recurring on a calendar is no longer an incentive, it's expected pay - the trap in the invocation example above.

   Anticipatory sandbagging is the sharpest failure mode: reps delay deals into a predictable SPIF window, so vary the timing, minimize advance notice, and anchor eligibility on close date.

8. **Support ramp with draws - quota relief is not yours.**
   - **Default:** non-recoverable draw during ramp.
   - **Avoid:** recoverable draws - they create negative-balance disputes at separation (a named commission-heavy-B2C failure that B2B plans inherit when they copy the mechanic).

   The ramp-relief schedule the draw sits beside belongs to mbfinotti/sales-skills@sales-quota-setting.

9. **Back-test, then gate on legal.** Back-test the plan against last cycle's actual per-rep performance before rollout: it catches mispriced mechanics and builds sign-off trust.

   Then run the counsel gate - these are check-with-counsel items, never things to resolve in-plan:
   - Written signed commission agreements (mandatory in several US states).
   - Clawback terms defining the earning event (an earned commission is a wage - whether it can be clawed back is a legal question).
   - Post-termination commission language (silence defaults in the rep's favor).
   - Retroactive caps (litigated).
   - Pay-transparency postings quoting full OTE ranges.
   - Inside-sales overtime-exemption status.
   - Commission-expense amortization treatment.

   Gate detail and citations: [governance-legal-and-market.md](./references/governance-legal-and-market.md).

10. **Document, sign, communicate, hold the cadence.**
    - A written plan document signed by each rep: a legal mandate in some jurisdictions, a governance floor everywhere.
    - Publish start and end dates matching the fiscal year.
    - Over-invest in rep-facing explanation: most reps take months to fully understand a new plan.
    - Annual cadence; anything mid-cycle is an exception with its own sign-off.

    Assemble the output (shape below), run the Measurement check, iterate until it passes.

## B2B vs B2C

The design principles transfer; the comp shape and the benchmarks do not. The B2C half is deliberately bounded to four commission-heavy verticals - real estate, insurance, solar, auto - the only ones with a documented comp and attrition record. Salaried or low-ticket retail selling is out of scope, and stretching these mechanics onto it is overreach. Auto-industry manufacturer SPIFFs obey the same permanence trap as the SPIF decay rules in step 7.

**Differs:**

- **The pay-mix derivation collapses.** Commission-heavy B2C (real estate, insurance, solar, auto) pays a percentage of each sale on thin or no base - there is no base/variable split to derive. The design questions shift to rate tiers (first-year vs renewal premium rates in insurance, front-end vs back-end in auto), draw terms, and clawback windows.
- **Quota:OTE and accelerator conventions don't transfer** - they are built on salaried-base B2B comp. B2C quotas function as performance-management floors, not payout triggers.
- **Draws are the central mechanic, not a ramp footnote.** Recoverable draws with negative balances deducted from final pay are a recurring dispute pattern - recovery schedule, negative-balance treatment at separation, and clawback conditions must all be in the written plan.
- **Attrition is a design input.** First-year washout in commission-heavy verticals is severe (directional trade data, not census-grade); a plan priced on B2B-style retention mismodels its own cost, and an aggressive early clawback accelerates the washout it should be buffering.

## Output shape

```
PLAN: fiscal period · roles covered · design-depth rung · owner / validator / signer
ECONOMIC FRAME: pay mix per role with influence rationale · quota:OTE (from quota plan) · implied commission rate
MEASURES: per role, max three, financial focus named
CURVE: threshold · decelerator (chosen or explicitly declined) · accelerator rate + bound check · windfall clause · marginal rate table
ROLE PLANS: per-role mechanics · crediting rules (written pre-close) · credited-tail caps
SPIF POLICY: windows/year cap · metric type · budget envelope · anti-sandbagging terms
DRAWS: type (non-recoverable default) · schedule · separation treatment
BACK-TEST: last-cycle payout under new plan vs actual · cost at high-attainment scenario
LEGAL GATE: jurisdiction list · counsel items flagged · sign-off status
GOVERNANCE: cadence · mid-cycle exception process · plan-health metrics tracked
```

## Failure modes

- **Capping in practice after "uncapped" in the document** - a litigated legal exposure, not just a design flaw. Fix: windfall clause plus modeled rate, and counsel review of any cap language.
- **The fourth metric** - added to cover a blended job. Fix the job description, not the plan (step 2).
- **Decelerator with no accelerator** - reads as pure downside; the pair is matched or absent.
- **Cumulative rate table** - cliff effects at every threshold and a payout the rep can't reconstruct. Marginal, always.
- **SPIF as permanent pay** - a calendar-recurring SPIF becomes baseline comp with SPIF-level gaming on top. Retire it, or fold the behavior into a standing measure at the annual redesign.
- **Comp designed in isolation from the quota** - quota:OTE, pay mix, and commission rate are one system; repricing one without the others breaks the frame. Coordinate with mbfinotti/sales-skills@sales-quota-setting.
- **Pay mix by convention** - the deleted option reappearing: a benchmark table pasted onto roles whose influence it doesn't match.
- **Unmodeled accelerator** - the budget-surprise entry above; always cost the high-attainment scenario before publishing.
- **Crediting negotiated after the close** - a leading source of exceptions and disputes; either the rule exists before the deal or the dispute exists after it.
- **Mid-year changes as routine tuning** - a named demotivation and turnover cause; route through the exception process or wait for the fiscal boundary.

## Measurement

The plan is not done until all of these pass; iterate until 100%:

- Every role plan carries at most three measures, with the financial focus named.
- Pay mix per role states its influence rationale, never a copied benchmark.
- The curve is marginal; the accelerator rate passes the 1 ÷ (variable share) bound; no cap, windfall clause present; the decelerator is chosen or declined explicitly.
- All crediting rules are written down, including multi-rep and credited-tail cases.
- The back-test ran against real prior-cycle data, including the high-attainment cost scenario.
- Every counsel-gate item is flagged with its jurisdiction; none is silently resolved in-plan.
- Signed plan documents exist, with fiscal-year start and end dates.

Outcome KPIs through the cycle:

- Attainment distribution shape vs modeled - a healthy plan puts most reps near quota with thin tails; a barbell signals a quota problem, not a comp problem - hand it back to mbfinotti/sales-skills@sales-quota-setting.
- Payout vs modeled cost.
- Exception and dispute counts.
- Time-to-resolution on commission questions.
- Share of reps who can explain their own pay calculation.
- Selling time in the 35-45% band.
- SPIF lift measured on close-date cohorts, never booking dates.

Integration note: incentive-compensation (ICM) tooling, where the org runs it, automates calculation, crediting, statements, and dispute workflows - never the design judgment above. The vendor landscape by org size: [governance-legal-and-market.md](./references/governance-legal-and-market.md).

## References

- See mbfinotti/sales-skills@sales-hiring for positioning OTE and pay mix in offers, and the 30-60-90 ramp plans behind draw schedules.
- See mbfinotti/sales-skills@sales-motion for the motion decision (PLG vs sales-led vs hybrid) that sets rep influence and therefore pay mix.
- See [./references/accelerator-curve-example.md](./references/accelerator-curve-example.md) for the worked curve, the cost model, and the negative examples.
- See [./references/role-plan-matrix.md](./references/role-plan-matrix.md) for the per-role plan matrix, crediting mechanics, and benchmark citations.
- See [./references/governance-legal-and-market.md](./references/governance-legal-and-market.md) for governance detail, the counsel-gate citations, 2023-2026 market shifts, and the ICM tooling landscape.