Your Complete Guide to Sales Rep Compensation - Part III: Commission Rate Benchmarking
How much should you pay a rep on a deal? And what's a good total commission stack look like?
Welcome back to part three of our March series on Sales Comp.
Today we’ll be looking at the typical SaaS Commission Stack, and how much reps should be earning per deal.
As a refresher, here’s what we’ve covered for paid members so far this month:
Part I: Designing Rep Comp Plans
Who’s involved in comp plan design
Getting the split right: Base vs Variable
Quota to OTE ratio
Baselining achievement
Accelerators
Paying sales managers
A case study: Salesforce’s early comp plans
What counts as a booking?
Comp plan flaws
Part II: The Art and Science of SPIFFS
Why do spiffs succeed or fail?
When’s the best time to run a spiff?
How should you structure spiffs?
What do common rewards look like?
Part III: Commission Rate Benchmarking
What commission rate should an Account Exec (AE) make on a deal?
What does the total commission stack look like after you factor in everyone else?
Things that can push the rates higher
A long standing point of debate between sales teams and finance teams is how much a rep should get paid as a percentage of the deal they sign.
We here at Mostly metrics have decided to change our name to Mostly Meta World Peace and unite those who pay and get paid, once and for all.
What commission percentage should an Account Exec (AE) make on a deal?
A company can pay a rep more per deal depending on how long the customer is estimated to stick around, AND what it costs to maintain the account over time.
From the cohort of CFOs and VPs of Sales Ops that I surveyed, the highest average AE payout reported was 14%, while the lowest was 6%.
Taking a step back, other than Customer Lifetime and COGS, a third factor you need to consider is how much support you are giving the rep to do their job. From a go to market perspective, are they sourcing the deals themselves? Are they getting fed warm leads? Do they have their own system engineer and BDR?
That leads us to our second piece of analysis - the total stack…