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Uncapped Commission vs. Capped: Which Drives More Sales?

When it comes to designing sales commission structures, one of the biggest decisions companies face is whether to offer uncapped commission or enforce a capped commission structure. Understanding the commission cap meaning and weighing the benefits of unlimited earning potential versus budget predictability can directly impact motivation, retention, and revenue.

This guide breaks down the differences, explores what uncapped commission really means, and helps you decide which model fits your sales strategy best.

Uncapped commission vs Capped commission

What Is Uncapped Commission?

Uncapped Commission Meaning

Uncapped commission means there's no upper limit to how much a salesperson can earn from commission pay. If they exceed quota and keep closing deals, their earnings keep climbing. If you have designed an incentive program with a tiered sales commission component the earnings will continue increasing although the commission rate is capped.

Uncapped Commission Example

Let’s say a rep has a 10% commission rate:

  • They close $500,000 in deals they'll earn $50,000 in commission.

  • If they close $1,000,000 they'll earn $100,000 in commission.

There's no commission cap stopping their earnings, meaning that they can "earn as much as they want" based on how much they sell.

Benefits of an Uncapped Commission Structure

  • Drives overachievement: High performers are rewarded proportionally based on their results.

  • Attracts top talent: Many experienced reps seek uncapped commission roles.

  • Aligns incentives with revenue growth: More sales = more earnings for everyone.

Potential Drawbacks

  • Budget unpredictability: If several reps outperform, payouts can spike. On the other hand, so does the sales revenue.

  • Pressure on margin: High commissions can erode profitability if not modeled correctly.

sales commission pay structures guide

What Is a Capped Commission Structure?

Commission Cap Meaning

A capped commission places a maximum limit on how much a salesperson can earn in variable pay, even if they outperform their quota. This can be particularly helpful in industries where supply is limited i.e. a Consultancy firm where the capacity depends on the number of consultants employed and available.

Why Use Capped Commission Structures?

  • Budget control: Limits liability in high-commission months.

  • Cost predictability: Useful in industries with tight margins or long sales cycles.

  • Fairness concerns: Sometimes used when internal bandwidth (e.g., fulfillment or onboarding) is constrained.

Downsides of Capped Commission

  • Demotivates high performers: Capping earnings can cause top reps to sandbag deals or leave.

  • Misaligned incentives: Why push harder if you won’t earn more?

  • Talent repellent: Top sellers often avoid companies that cap commissions.

Side-by-Side Comparison

Feature Uncapped Commissi Capped Commis
Earning Potential Unlimited Limited
Motivation Level High (especially top reps) Can taper off post-cap
Budget Predictability Low High
Risk of Overpayment Medium–High Low
Talent Attraction Strong Weak with top-tier reps
Long-Term Revenue Impact Positive (if modeled well) Potentially negative

Which Commission Structure Drives More Sales?

Uncapped commission is more likely to drive high performance - especially in environments where:

  • There are no hard limits on lead flow or capacity.

  • Sales cycles are fast enough to compound gains.

  • You need to attract elite sales talent.

That said, a capped commission model can be viable for:

  • Early-stage companies managing burn.

  • Highly commoditized products with low margins.

  • Temporary or transitional sales roles.

The key is finding a balance between upside, predictability, and cultural fit.

Guide to Mastering Sales Commissions

Best Practices for Structuring Commission Pay

  1. Model earnings across all scenarios.

  2. Avoid hard caps if possible; use soft caps or accelerators.

  3. Clearly define commission tiers and thresholds.

  4. Be transparent about what "uncapped" means.

  5. Use commission software (like Bentega) to simulate costs and track rep performance.

Final Thoughts

So, what does uncapped commission mean for your business? In short - it means incentivizing growth. But it also requires solid planning and visibility.

While capped commission offers security, it can limit the very behavior you're trying to reward. For most growth-stage companies, especially those in SaaS or B2B sales, an uncapped commission structure (with thoughtful modeling) is often the smarter choice.

Explore more

Bentega helps sales teams design smarter, scalable sales commission structures - from uncapped incentive models to hybrid plans. Whether you're exploring what is uncapped commission, building a capped commission structure, or optimizing your entire commission pay process, our tools and consultants help align compensation with revenue goals. Build better plans with Bentega.