Building Sales Commission Plans

This article provides a comprehensive guide to designing effective sales commission plans for 2025, emphasizing that commissions should incentivize not just deal closure but strong customer unit economics and retention. It covers ten critical components: commission purpose, OTE, quota setting, quota periods, accelerators, ramp time, renewals/expansion treatment, team targets, usage-based pricing adjustments, and clawback mechanics. The author argues that commission plans should prioritize CAC payback period alignment and customer lifetime value over pure sales volume, with benchmarking data showing median CAC payback periods have deteriorated to 34 months in 2024.