How to Build an SDR Compensation Plan

Most SDR comp plans fail in one of two directions. Pay purely on meetings booked and the calendar fills with prospects who have no budget and no reason to be there. Pay purely on closed won and the SDR spends the quarter waiting on deals owned by someone else. The workable plan sits between those, and it depends on acceptance criteria specific enough to survive a disagreement.

What should an SDR be paid on?

A primary component tied to accepted meetings or qualified opportunities created, and a secondary component tied to what those opportunities become. The primary component pays for the work the SDR controls. The secondary component keeps them honest about quality.

The relative weighting is the design decision. A plan weighted toward volume produces volume. A plan weighted toward downstream outcomes produces caution, which is useful up to the point where the SDR stops booking anything they are unsure about.

Those weights are a starting point to model against your own data. Whatever split you choose, publish it with worked examples showing what a quarter at 80, 100, and 120 percent attainment pays.

How do you set the SDR quota?

Derive it from the pipeline gap rather than from a meetings-per-day standard. Work the arithmetic backward:

- Start with the pipeline the segment needs for the period. - Divide by average closed-won deal size to get the opportunity count required. - Apply the historical conversion rate from accepted meeting to qualified opportunity. - Divide the result across the SDR headcount actually working the segment.

That produces a quota the capacity plan supports. A meetings-per-day standard borrowed from another company produces a number disconnected from the revenue it is supposed to create.

Use closed-won deal size in that calculation rather than pipeline deal size. Those two numbers diverge more than teams expect. A pipeline carrying an 80,000 dollar average while closed-won deals average 40,000 dollars means the opportunity count required is double what the pipeline math suggested.

How do you define an accepted meeting?

Write the criteria into the plan with named CRM fields, a rejection window, and reason codes. Vague definitions turn every disputed meeting into a management escalation, and the SDR loses those arguments by default because the account executive controls the record.

A workable definition specifies:

- Who the meeting is with. Title, function, and whether an economic buyer is required. - What must be confirmed in advance. Named pain, current solution, and a stated reason for the conversation. - The rejection window. Typically 48 hours after the meeting occurs, after which it stands. - Reason codes for rejection. A closed list, entered in the CRM, reviewed monthly.

Review rejected meetings monthly with both roles in the room. A single account executive rejecting far more than peers is either getting worse meetings or protecting their own qualification rate, and the pattern is visible in the data within a quarter.

Should SDRs be paid on closed won revenue?

Yes, as a secondary component weighted well below the pipeline component. It gives the SDR a reason to care what happens after the handoff and discourages booking meetings that will never convert.

The reason it cannot be primary is timing. Opportunity models at ORM predict close-time curves running from 1 to 80 weeks depending on the deal group, with most expectation landing before week 12. On a team whose deals sit past week 12, an SDR paid mainly on closed won is earning in one quarter for work done two quarters earlier. That breaks the feedback loop the plan is supposed to create, and it makes a strong quarter feel like a weak one.

Pay the closed-won component when the deal closes, credited to the SDR who sourced it, regardless of whether that SDR has since been promoted.

What pay mix works for an SDR?

A lighter variable component than a closing role, because the SDR controls meeting creation and not the close decision. A 70/30 split is a reasonable starting point to model. The principle behind it is that variable pay should scale with control over the outcome.

Test the mix against the real distribution before publishing. Run a below-plan quarter at 75 percent attainment and read what the SDR takes home. If a soft quarter pushes earnings under what the local market pays for the role, expect attrition in exactly the quarter you need coverage most.

How do you keep the plan from producing junk pipeline?

Measure sourced pipeline against what it converts to, then feed that back into the acceptance criteria. Track conversion from SDR-sourced opportunity to closed won separately from other sources, and compare the win rate across them. If SDR-sourced deals convert materially worse, the acceptance bar is too low no matter how good the meeting count looks.

Aging is the other check. Opportunities that sit without a stage change, a close date change, or an amount change are not real, and a book that is 10 percent or more untouched for a year is common enough that nobody notices it. SDR-sourced pipeline that ages faster than other sources points at the same acceptance problem.

What breaks an SDR plan mid-year?

Territory reassignment and market movement. Reassigning accounts mid-quarter resets the research and sequences an SDR already has in flight, and the quota does not move with it. Pricing pressure that lowers average deal size raises the opportunity count needed to hit the same pipeline number, which quietly makes the quota harder without anyone changing it.

Recheck the quota derivation each quarter against current deal size and current conversion rates, the same way you would recheck a pipeline coverage assumption. A plan built on last year's arithmetic gets harder every month the market moves.