Sales Commission

Sales commission is the variable pay a rep earns on the deals they close. Three inputs set the number: the commission rate, the base the rate applies to, and the accelerators that raise the rate once a rep clears quota. The first two decide how much a deal pays. The third decides something forecasting teams care about more, which is when reps try to close it.

Rate, base, and accelerators

Rate is the percentage a rep earns on a deal. A plan might pay 10% on new business. Some plans hold the rate flat across the year. Others tier it, paying a lower rate on early attainment and a higher rate later. Base is the dollar figure the rate multiplies. Common bases are total bookings, annual contract value, total contract value, recognized revenue, or gross margin. The base shapes behavior. Pay on bookings and reps chase logo count and contract length. Pay on margin and reps protect price, because every dollar of discount cuts their own check. Accelerators raise the rate above quota. A rep at 100% attainment earns the base rate, then 1.5x to 2x that rate on every dollar past quota. Accelerators are the strongest timing lever in a comp plan, because they change what a single deal is worth depending on when it lands.

How commission mechanics move deal timing

Accelerators and period boundaries pull against each other, and reps respond to both. A rep who has already crossed quota sits in accelerator territory, so every remaining deal pays more this period than next. They pull deals forward, sometimes trading a discount for a signature before the quarter closes. A rep sitting well below quota does the opposite. A deal that will not lift them over quota is worth more next period, when it can count toward a new number and the higher rates that follow. So it gets pushed.

The result is closes that cluster at period end for comp reasons, not demand reasons. ORM's view of forecasting treats this directly. The strongest slippage signal is a rep changing a deal's close date, and a deal that slips one quarter is less likely to close at all. Pull-forward gets modeled as its own revenue source, separate from carry-over pipeline and from deals created and closed inside the quarter, because the discount and the borrowed future deal both carry a cost.

Why this matters for the forecast

A forecast that trusts every close date inherits the comp plan behind it. Reading the quarter correctly means separating deals that close on their own merit from deals timed around a threshold. Commission structure is one of the first places to look when close dates bunch up in the final weeks.