I coach dozens of sellers making over 500K-1M/year, and there’s one thing they have in common which nobody talks about that’s foundational to their success: 

They have great comp plans!

Each of these sellers has a high OTE (On-target Earnings), fair quota, and generous accelerators which allow them to get financially rewarded when they crush their number. 

So how do you know if you have a great comp plan which allows you to make life-changing money? 

In today’s training video, I share everything you need to know about tech sales comp plans. 

This training includes critical information to maximize your income, including: 

• What are good OTE’s for SMB, Mid-Market, Commercial, Enterprise, and Strategic segments?

• What is the quota range you should expect based on your segment?

• What’s a great commission % in software sales?

• What are accelerator bands and how do they work?

• How much do you need to sell to make 500K-1M as an Enterprise AE?

Here are a few of the top insights from the video: 

1. The key to making 500K+ is the unique combination of a high OTE plus a low quota. This gives you an opportunity to blow out your quota and get into accelerators quickly, where the real money is made. 

2.  Comp plans with a 5x OTE to quota ratio are highly favorable, 6x is much more common, and 7x is less than ideal. So if your OTE is 300K, a 1.5M quota is great, a 1.8M would be more common, and anything over 2.1M is less than ideal for making big money. Enterprise AE’s at larger companies (Oracle, Salesforce, SAP) typically see 7x + ratios, since they have bigger deal sizes in that segment, which still provide the opportunity to blow it out. 

I’ve seen clients with a 300K OTE and a 900K quota (3x ratio), which is an incredible earning opportunity. I’ve also seen clients with the same 300K OTE and a 3M quota (10x), which becomes more challenging because you must sell 9M ACV to hit 300% of quota. 

Please note that I’m referring to growth quotas, not renewals. So if you work in a consumption model, just look at your growth number. 

3. Most commission plans have accelerators that multiply 1.5x, 2x, and 2.5x when you overachieve. So if your base commission rate is 10%, that means you make 15%, 20%, or 25% of revenue based on the overachievement band that you’re in. 10% base commission is healthy, 15%-20% commission in accelerators is common, and anything over 20% is excellent. 

4. The best comp plans have no commission decelerators. For example, anything over 200% of plan will pay at the highest accelerator level. At larger companies, decelerators are more common, typically when you reach 200 or 250% of quota. This means that your commission rate goes down, which actually encourages reps to sandbag for next year once they reach their maximum commission tier to avoid getting penalized. This is less than ideal. 

To see how your comp plan stacks up, watch the full video here: https://youtu.be/Stu1r8nmOmo

At the end of the video, I even share a link to a free income planner to help you calculate how much you need to sell to make 500K-1M based on your unique comp plan. 

Enjoy! 

-Ian