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Commission Structures: How to Build a Sales Commission Plan That Drives Revenue

A sales commission structure defines how your team earns variable pay — and how your business rewards performance. The right structure drives motivation, balances costs, and ensures fairness across roles.

In this guide, you’ll learn how different commission models work, when to use them, and how to build a structure that grows revenue without creating confusion or disputes.

What Is a Sales Commission Structure?

A sales commission structure defines how sales reps earn variable pay. It outlines rates, tiers, thresholds, and the behaviors that trigger payouts.

Different structures are designed to encourage sales teams to strive for excellence but also fosters a competitive and dynamic work environment. By providing clear and attainable goals, sales professionals can be empowered to maximize their potential and contribute significantly to our overall success.

In short, it’s the rulebook that turns company goals into personal motivation.

💡 If you’re new to commissions, start with our Sales Commission Guide →.

Why Commission Structure Matters

The right structure can make or break team performance.

A strong plan should:

  • Motivate reps to focus on the right deals.
  • Reward overachievement without breaking budgets.
  • Encourage collaboration instead of competition.
  • Provide clarity and reduce disputes.
  • Scale as your business grows.

When reps understand exactly how their effort translates into earnings, trust and performance rise together.

Common Sales Commission Structures

1. Flat-Rate Commission

Reps earn the same percentage for every sale — regardless of size or timing.

Example:
10% commission on all sales.

Best for: Simple sales cycles or transactional products.

Pros: Easy to understand and administer.
Cons: Doesn’t reward top performers or encourage upselling.

2. Tiered Commission

Rates increase as reps hit higher sales levels.

Example:

  • 5% up to $50,000

  • 7% between $50,001–$100,000

  • 10% beyond $100,000

Best for: Motivating top performers and scaling effort.

Pros: Rewards overachievement.
Cons: Can be complex to calculate manually.

💡 Automate tier tracking and payouts with Bentega →

3. Draw Against Commission

Reps receive a guaranteed advance (“draw”) that’s later offset against earned commission.

Example:
A $2,000 monthly draw deducted from actual commissions.

Best for: New hires or unpredictable markets.

Pros: Provides income stability.
Cons: Requires accurate tracking to avoid confusion.

4. Gross Margin Commission

Commissions are based on profit, not total revenue — aligning reps with healthy margins.

Example:
10% of profit per deal, not revenue.

Best for: Mature businesses emphasizing profitability.

Pros: Encourages high-value selling.
Cons: Can discourage discounting flexibility.

5. Split Commission

Commissions are shared between multiple contributors.

Example:
Account executive (60%) + sales engineer (40%).

Best for: Collaborative or complex B2B sales.

Pros: Encourages teamwork.
Cons: Requires clear rules to prevent overlap disputes.

6. Commission by Role

Different structures for hunters, farmers, and managers.

Example:
Hunters earn higher new-business rates; account managers earn retention bonuses.

Best for: Companies with specialized roles.

Pros: Tailored motivation.
Cons: More administrative complexity (unless you have Bentega...).

Choosing the Right Structure

When selecting your commission structure, ask:

  1. What behaviors drive your growth strategy?

  2. What level of control does each rep have over results?

  3. What data do you have to measure performance?

  4. What’s your budget for variable compensation?

💡 Learn how to calculate realistic targets in our KPIs & Metrics Guide →

Simplify Commission Design with Automation

Building and managing commission structures manually is time-consuming and error-prone.

With Bentega, you can design, manage, and automate every structure in one place.

  • Model and simulate plan changes instantly.

  • Track tier thresholds and payouts automatically.

  • Give reps real-time visibility into earnings.

Product Bentega

Best Practices for Structuring Commissions

  • Keep structures simple and transparent.

  • Test new models on historical data before rollout.

  • Align incentives with company KPIs.

  • Avoid hard caps; use soft thresholds instead.

  • Review structure performance quarterly.

  • Document all terms clearly.

A commission structure should guide behavior — not just compensate it.

 

Common Mistakes to Avoid

  • ❌ Overcomplicating the payout formula.

  • ❌ Ignoring non-quota roles that influence success.

  • ❌ Setting unrealistic thresholds.

  • ❌ Changing structures too frequently.

  • ❌ Failing to communicate updates clearly.

💡 Simplify management and eliminate confusion with Bentega →

Commission Structure Examples & Best Practices

The best sales commission structures combine clarity, motivation, and flexibility. Below are the most common models — with examples of when to use each and how they can support your overall incentive strategy.

Base Salary Plus Commission Structure

Base Salary plus Commission

Base Salary plus Commission is a common sales commission structure used in many sales and performance-driven roles. It combines a fixed salary (the base salary) with additional earnings that are tied to performance (the commission).

Here’s how it works:

  1. Base Salary: This is the guaranteed amount an employee earns regardless of their performance. It provides financial stability and ensures that employees have a steady income.

  2. Commission: This is the variable portion of the compensation. It is typically a percentage of the sales or revenue that the employee generates. The more sales or revenue the employee brings in, the higher their commission will be.

As commission structures can take many different forms depending on which components are used the visual profile can vary, and all examples below can be combined with a base salary as a guaranteed amount.

Flat-Rate Commission structure

Flat-Rate Commission

Flat-rate commission refers to a sales commission structure where a salesperson or agent earns a fixed amount of commission for each sale or transaction, regardless of the sale amount. This means that whether the sale is large or small, the commission earned remains the same.

For example, if a salesperson is offered a flat-rate commission of €50 per sale, they would receive €50 for every sale they make, no matter if the sale is worth €100 or €1,000.

This type of commission structure is simple and predictable, which can be advantageous for both the employer and the employee. However, it may not incentivize employees to pursue higher-value sales since their commission does not increase with the size of the sale. This structure is often used for Sales Development Representatives (SDRs), where they receive a flat-rate commission for every meeting they book.

Tiered Commission structure

Tiered Commission

Tiered commission is a sales commission structure where the rate of commission increases as a sales representative reaches certain predefined sales thresholds or targets. This structure is designed to incentivize higher performance by offering progressively higher rewards as sales reps achieve more significant levels of sales.

Example: A sales rep earns:

  • 3% on the first $50,000 in sales,
  • 5% on sales between $50,001 and $100,000,
  • 7% on sales above $100,000. 
If they make $150,000 in sales, they earn:

  • $1,500 for the first $50,000 (3%),
  • $2,500 for the next $50,000 (5%),
  • $3,500 for the last $50,000 (7%),
  • Total commission: $7,500.

Tiered commission structures are a powerful way to motivate sales teams to exceed their targets and drive significant revenue growth. By offering progressively higher rewards for higher sales volumes, companies can align their compensation plans with business objectives and foster a competitive, high-performance sales culture.

Compensation Plan and policy download free guide
Accelerated Commission structure

Accelerated Commission

When using accelerators the commission rates increase after the rep surpasses their sales quota or certain milestones. This sales commission structure rewards high performance.

Illustrative Example:

A sales rep earns:

  • A straight percentage-based commission of 4% up to a certain point i.e. €100,000 in sales
  • After surpassing €100,000 the target, the commission rate increases to 8% for sales between €100,000 - €120,000.
  • When the sales rep moves beyond €140,000 in sales, the commission rate increases to 15%, and so on.

These step-ups in commission rates, such as when the rate leaps from 4% to 7%, are known as accelerators or kickers. They are illustrated by the black tangents displaying the changing steepness of the curve.

Implementing a variety of accelerators, for instance, one based on the sales volume and another on the duration of contracts, is a strategic approach to steer sales representatives towards prioritizing the most beneficial deals.

Flat-Rate Commission structure

Straight Percentage-Based Plan

Straight Percentage-Based Commission refers to a sales commission structure where a salesperson earns a flat percentage  each sale or transaction, regardless of the sale amount. This means that whether the sale is large or small, the commission share remains the same.

For example, if a salesperson is offered a straight percentage-based commission of 10% per sale, they would receive €50 for a €500 sale.

As for Flat-Rate Commission, this type of commission structure is simple and predictable. Yet, it might not drive employees to seek out larger sales opportunities, as their commission earnings remain constant regardless of the sale's value. However, as the commission is calculated as a share of revenue the company does not risk to lose money if the sales is not big enough to cover commission which is the case for a Flat-Rate Commission.

Guide to Mastering Sales Commissions
Quota-Based Commission structure

Quota-Based Plan

Sales reps earn commissions only after reaching a predetermined sales target (quota). This compensation structure drives reps to meet or exceed their quotas.

Here's how it works:

A sales rep has a monthly quota of €50,000 in sales. They earn 5% commission on all sales over €50,000. If they sell $70,000 in a month, they earn 5% on €20,000, which is €1,000.

In this example the quota works as a gate or a condition that needs to be met before sales reps are eligible for commission. This commission structure is often used to reduce risk on a company level and is especially valuable for sales driven organizations with liquidity constraints.

A Quota-Based Commission is usually combined with a lower base salary or guaranteed commission set as a floor to compensate the risk for the sales rep.

Jigsaw Commission structure

Jigsaw Structure

In commission structures, the term "jigsaw" represents a compensation approach where commissions or bonuses are earned based on achieving various components of a sales target, often in a sequential or cumulative manner. This metaphorically illustrates how different performance elements or milestones come together to form the complete compensation picture.

Key Aspects of a Jigsaw Commission Structure:

  1. Component-Based Targets: The commission is segmented into various components or stages, each symbolizing a specific target or milestone. Sales professionals must meet these objectives to qualify for their commission or bonuses.

  2. Sequential Achievement: Often, the structure requires that each component be achieved in sequence. For example, a salesperson might need to hit certain sales thresholds in different quarters before qualifying for additional incentives.

  3. Cumulative Goals: The jigsaw approach may involve cumulative goals, where achieving one target unlocks the potential to earn a commission on subsequent targets. For instance, reaching a €50,000 sales target per quarter qualifies for a year-end bonus.

Overall, the jigsaw commission structure aims to inspire sales professionals by establishing transparent, step-by-step targets that result in higher earnings as they advance, ultimately aligning their actions with business goals and boosting performance.

Capped Commission structure

Capped Commission

Capped commission refers to a commission structure in which there is a maximum limit, or "cap," on the amount of commission a sales representative can earn. Once the sales rep reaches this predefined limit, they can no longer earn additional commissions for that period, regardless of how much more they sell.

Practical Example:

A sales rep earns a 10% commission on all sales. The company has set a commission cap at $50,000 per quarter.

  • Q1 Sales: The rep generates $400,000 in sales, earning $40,000 in commission (10% of $400,000).
  • Q2 Sales: The rep generates $600,000 in sales, which would normally earn them $60,000 in commission. However, due to the $50,000 cap, they only receive $50,000 for that quarter, and the remaining $10,000 in potential commission is not paid out.

Capped commissions are a tool that companies can use to balance rewarding high performance with managing their overall compensation budget, but they must be carefully structured to avoid negative impacts on sales motivation and overall company culture.

Residual Commission structure

Residual Commission

Residual Commission describes a compensation plan where sales reps earn ongoing commissions for as long as their customers continue to generate revenue. This structure is common in subscription-based or recurring revenue models.

Example:

A sales rep sells a software subscription worth €1,000 per year. They earn a 5% commission annually as long as the customer renews. They earn €50 each year the customer stays subscribed. The next sale will generate a commission on top of the already €50 earned on the first sale.

This incentive model is often combined with other components to incentivize focus on Ideal Customer Profiles (ICPs). The use of residual commission is just as common in compensation plans designed for Marketing and Customer Success as it is for Sales. It is often used to incentivize collaboration between departments and elevate Revenue Operations.

Residual commission is particularly attractive in industries where long-term customer relationships are key to business success. It provides a powerful incentive for salespeople to prioritize not just closing deals but also maintaining and nurturing those relationships.

Flat-Rate Decelerator structure

Flat-Rate Decelerator

A flat-rate decelerator is a type of commission structure used to adjust the earning potential of a salesperson or agent based on their performance. It typically comes into play when salespeople exceed certain sales targets or thresholds.

Initially, a salesperson is awarded a fixed commission per sale, irrespective of the individual transaction's value, ensuring a steady income stream from the get-go. Once a salesperson surpasses a predetermined goal or benchmark, the commission rate begins to taper off, effectively reducing. This strategy aims to regulate expenses, optimize profits, or ensure a fair distribution of rewards.

For example, in a case where a SDR has booked the maximum number of meetings the sales team can handle, the incentive to continue booking meetings diminishes significantly.

Key Takeaways

  • The right commission structure aligns pay with performance and business goals.

  • Simplicity and clarity increase adoption and reduce disputes.

  • Different roles may require different structures (e.g., SDRs vs. Account Executives).

  • Automating calculations helps maintain fairness and save time.

A smart commission structure is a blueprint for sustainable growth.

FAQ — Sales Commission Structures

What is a sales commission structure?

A sales commission structure defines how sales reps earn variable pay — including rates, tiers, and thresholds.

It determines how performance translates into compensation and helps align behavior with business goals.

💡 Start with the basics in our Sales Commission Guide →

What are common types of sales commission structures?

The most common types include:

  • Flat-rate commissions

  • Tiered commissions

  • Draw against commission

  • Gross margin-based commissions

  • Split commissions

  • Role-based models

Each has its pros and cons depending on company size, goals, and sales complexity.

💡 See examples and when to use each in our Incentive Compensation Guide →

How do you choose the right commission structure?

Start with objectives and role responsibilities, then pick a structure. Then define what outcomes you want to drive — such as new revenue, retention, or profitability.

Then select a structure that reinforces those goals, is easy to understand, and can scale with your team.

💡 Learn how to measure the right KPIs → KPIs & Metrics Guide

What are accelerators and decelerators?

Accelerators increase rates above target to reward overperformance; decelerators reduce rates to discourage low-quality or unprofitable deals.

Should I cap commissions?

Capping reduces risk but can demotivate top performers. Many plans use high caps or no caps with guardrails and clawbacks for true outliers.However, if you need to stay in control of limited supply, or you are a consultancy firm with limited capacity, it makes sense to cap the commission plan.

How do I handle split credit and teams?

Define clear crediting rules, roles, and percentages up front. Use your system to track and audit split deals consistently. 

How often should you review commission structures?

Review at least once a year, ideally every quarter, to ensure alignment with business objectives and market changes.

Regular analysis helps prevent pay imbalance and maintain motivation.

Can commission structures be automated?

Yes — with Bentega, you can design, simulate, and manage multiple commission structures in one platform.

This eliminates manual errors, ensures fairness, and saves time for finance and sales leaders.

💡 See automation in action → Book a Demo

Can Bentega model different structures?

Yes. You can simulate outcomes, compare structures, and choose the model that best balances motivation and cost.

Automate Commission Structures with Bentega

Design and manage commission structures that scale effortlessly.

  • Build custom models for any team or role.

  • Track payouts automatically and fairly.

  • Integrate CRM and payroll data seamlessly.

  • Give everyone full visibility into performance.

Commission management doesn’t need to be complicated — automate it with Bentega.

Related reading

Explore more resources:
Visit our Guides & Resources hub for expert articles and free downloads on OTE, Incentive Compensation, Sales Commission, Bonus, SPIF, and more.

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