Money drives behavior.
So your comp plan is your real strategy
Whatever you put on a strategy slide, your reps do what they're paid to do. Quota and compensation are the most powerful behavioral tools you own, but you can't design them in a vacuum. Underneath a quota that works sits funnel math, and underneath that sits the unit economics of each sales model. Skip the foundation and you're paying for behavior you never modeled.
THE CORE PRINCIPLE
Quota and comp don't measure behavior. They cause it
Want expansion revenue but only pay on new logos? You'll get new logos. Want multi-year deals but your accelerator rewards raw volume? You'll get volume. Set a quota from a spreadsheet wish instead of funnel capacity, and reps disengage by month two because the number was never reachable. When the comp plan and the strategy point in different directions, the comp plan is what actually runs your sales floor. That's why it can't be the first thing you design - it has to be the last, built on top of math you've already done.
THE ORDER THAT MATTERS
You build comp from the bottom up - not the top down
Most companies start at the top: "the target is $5M, we have 5 reps, so quota is $1M each." That's backwards. A quota only means something if the funnel can produce it, and the funnel only makes sense if the unit economics support it.
COMPENSATION
Designed to drive the right behavior
QUOTA
Derived from funnel capacity – attainable
FUNNEL MATH
Conversion rates that produce one closed deal
UNIT ECONOMICS
CAC · ACV · margin · payback – per sales model
FOUNDATION - LAYER 1
Start with unit economics, per sales model
Each sales motion has different economics. A quota that's reasonable in a PLG motion is impossible in an enterprise sales-led one, and vice versa. Before any quota, you have to know what one customer costs and is worth in your motion.
Unit economics shape what quota is even possible
Directional by motion
If CAC payback runs past ~18 months in your motion, the quota and comp can’t fix it – the economics are broken upstream. That’s a strategy problem, not a sales problem. See Sales Motion Design →
FOUNDATION - LAYER 2
Then do the funnel math
A quota is the top of a funnel worked backwards. To close X, a rep needs Y opportunities, which needs Z meetings, which needs a known volume of activity. Set the quota without this and you're guessing.
From activity to closed revenue
1,000
leads
200
meetings
· 20%
60
opps
· 30%
15
won
· 25%
What funnel math protects you from
Quota from thin air
Target ÷ headcount, with no funnel to back it
Under-capacity
Not enough pipeline coverage to hit the number – ever
Ramp ignored
New reps given full quota from day one
Coverage blind spots
No early signal that the team is short before quarter-end
Coverage rule of thumb: most B2B teams need 3-4× pipeline coverage against quota. If the funnel math says coverage is below that, the quota is fiction before the quarter even starts.
FOUNDATION - LAYER 3
Now set the quota - from capacity, not from hope
Capacity-based
Derived from the funnel math and ramp curves – the number the system can actually produce, not the number you wish it would.
Attainable, but stretching
Set so roughly 60-70% of reps can hit it. Too easy and you overpay; impossible and the team disengages and churns.
Ramp-adjusted
New hires get a ramped quota over their first two or three quarters – so you don’t pay full freight for pipeline that doesn’t exist yet.
FOUNDATION - LAYER 4
Finally, design comp to drive the behavior you want
Now, and only now, you design the plan. The structure you pick should pull the exact behavior your strategy needs: new logos, expansion, multi-year, or margin.
Salary-Only
Predictable, low-pressure. Best for long enterprise cycles and relationship-led account management where premature closing hurts.
Commission-Only
Uncapped, aggressive. Best for high-velocity, high-transaction motions. High motivation, high turnover risk.
Salary + Commission
The B2B default. Stability plus incentive. Best for most SDR, AE, and mid-market roles.
Tiered Commission
Rates accelerate past quota (e.g. 5% → 8% → 12%). Pulls overperformance without raising base. Great for high-growth teams.
Draw Against Commission
A recoverable advance that gives new hires income while they ramp. Best for new reps and seasonal cycles.
Profit-Based
Commission on deal margin, not revenue. Aligns sales with profitability – best when deals have negotiable, variable margins.
BASE VS VARIABLE, BY ROLE
The split itself is a behavioral lever
How much pay you put at risk signals how much control the rep has over the outcome. Pipeline-generators and closers carry more variable; infrastructure roles carry more base.
On-target earnings: base (navy) vs variable (orange)
More control over the outcome → more variable. Less direct control → more base. The split should match the role’s actual leverage.
WHAT WE BUID
The full stack - economics to payout
Unit Economics Model
CAC, ACV, margin, and payback by sales model – so quota sits on real numbers, not assumptions.
Funnel & Capacity Math
Conversion rates and coverage ratios that derive a quota the funnel can actually produce.
Quota Design
Capacity-based, ramp-adjusted, attainable-but-stretching quotas reps believe in.
Comp Plan & Accelerators
OTE, base/variable splits, accelerators, SPIFs, and expansion incentives – designed to pull the exact behavior your strategy needs.
DESIGN PRINCIPLES
What separates a plan that works
Align comp with strategy – every accelerator should pull a behavior the strategy actually wants (expansion, multi-year, new segment).
Keep it simple – if a rep can’t calculate their own commission, the plan can’t motivate them. Complexity kills motivation.
Benchmark to market – OTE and splits have to be competitive to attract and keep the talent your motion needs.
Make it measurable – the plan only works if payout is transparent and trusted. Disputes destroy motivation faster than a low number.
Review on a cadence – comp drifts out of alignment as the motion and market shift. Revisit it at least annually, not never.
The plan is the strategy, in practice
You can write any strategy you like on a slide. What your reps do every morning is set by the comp plan. When comp is built bottom-up - on real unit economics, real funnel math, and a quota the funnel can produce - it pulls the team toward the number instead of fighting it. When it's bolted on top with no foundation, you pay full freight for behavior you never modeled, and wonder why the strategy never executes.
WHY IT MATTERS
EXPLORE MORE
Related capabilities
COMMON QUESTIONS
Frequently asked questions
How should we set sales quotas?
Quotas should be built bottom-up from unit economics and funnel math – average deal size, conversion rates, and ramp – so they’re both ambitious and attainable. Quotas set top-down by mandate without funnel grounding lead to sandbagging, rep churn, and missed forecasts.
What is a good base-to-variable pay split?
It depends on the role’s control over the outcome. Common splits: 50/50 for AEs, 60/40 for SDRs, 70/30 for CSMs, and 80/20 for RevOps. The more directly a role drives revenue, the higher the variable portion – so pay aligns with the behavior you want.
Should commissions have accelerators and caps?
Accelerators (higher rates above quota) reward overperformance and discourage sandbagging, so top performers keep selling past 100%. Caps usually backfire by demotivating your best reps. Clawbacks for early churn are worth keeping, so you pay for durable revenue, not just bookings.
Is your comp plan driving the right behavior?
Start with a Sales Audit. We'll trace your quota back to the funnel and the unit economics underneath it, and show you where comp is paying for the wrong things.
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