What is a typical sales commission rate?

Typical commission rates vary widely by industry and role, but many B2B teams use effective rates between 5% and 15% of revenue, calibrated so on-target earnings match the market for that role.

How can Bentega help with sales commissions?

Bentega automates commission calculations, tracks attainment in real time, and gives every stakeholder clear visibility into rules and payouts so finance, sales, and HR can avoid disputes and errors.

Sales Commission: Definition, Models & How to Calculate

Q: What is sales commission?

Sales commission is variable pay that a salesperson earns based on the revenue, margin, or activity they deliver. It sits on top of base salary and rises or falls with performance.

Q: How do you calculate sales commission?

The simplest way to calculate sales commission is to multiply eligible sales by a commission rate, for example Commission = Sales × Rate. More advanced plans add tiers, accelerators, or quotas to that basic formula.

Q: What are common sales commission models?

Common models include flat-rate commission per deal, percentage of revenue or margin, quota-based commission, tiered rates above target, and hybrid plans that mix salary, bonus, and commission components.

A well-designed sales commission plan is one of the most direct ways to link revenue growth with sales motivation. When the rules are clear and payouts are accurate, leaders can forecast cost of sales, and reps can see exactly how performance turns into earnings. If you’re still defining the basics, start by using this sales commission guide as your blueprint before you dive into specific structures or tools.

This guide explains what sales commissions are, the core mechanics, key formulas, common models, typical rates, and how to calculate commissions with worked examples. We’ll close with a one-page plan template, implementation checklist, and how Bentega helps you automate the entire process. For a broader view of variable pay, see our Incentive Compensation Guide.

What Is Sales Commission?

Most teams first search for phrases like what is sales commission or "how do commissions work" when they start formalizing a plan. The core idea is simple: a sales commission is variable pay earned when a sales rep produces measurable business results.

Put differently, the sales commission meaning is “pay for performance” tied to specific metrics such as revenue, bookings, margin, or renewals. When those metrics move, commission earnings move with them.

Sales commission sits alongside other forms of variable pay:

Base salary: fixed, predictable pay for the role.
Bonus: periodic lumpsum payouts tied to broader company or team results. See our Bonus Guide.
SPIF: short-term contests or sprints designed to push a specific goal (launch, campaign, or quarter-end). See our SPIF Guide.
OTE (On-Target Earnings): total expected annual pay (base + variable) at 100% quota attainment. See our On-Target Earnings guide.

Sales commission plans are powerful because they scale naturally with performance. When revenue goes up, payout goes up. When revenue stalls, cost of sales adjusts automatically.

How Sales Commissions Work (Formula & Key Terms)

Before you redesign anything, it helps to ground the plan in a simple explanation of how sales commissions work. Underneath every complex spreadsheet is the same basic idea:

Core sales commission formula:

Sales Commission Payout = Eligible Revenue (or Profit) × Commission Rate ± Adjustments

Those adjustments can include accelerators, decelerators, draws, and clawbacks. To keep everyone aligned, document these core concepts explicitly:

commission rate: The percentage of eligible revenue (or profit) that becomes commission. For example, 10% of closed-won ARR.
Eligible revenue vs. margin: Decide whether you pay on ARR, TCV, or gross margin. Margin-based plans reward healthier deals.
Quota and attainment: The yearly or quarterly target and the percentage the rep achieves. Attainment often unlocks accelerators.
OTE and pay mix: Target annual earnings at 100% attainment and the split between base and variable. (Example: 60/40 pay mix with $150k OTE.)
Accelerators & decelerators: Higher or lower rates used to reward over-performance or protect margins when results lag.
Draws & clawbacks: Timing tools that smooth income or protect the business if deals churn or refund.
Commission percentage: A practical expression of the rate (e.g., "our standard commission percentage on new ARR is 8%–10%").

From here, your main design job is to define which deals are eligible, which metrics matter, and how the mechanics encourage the behaviors you want more of. For more detailed examples and spreadsheet tips, see our guide to calculating sales commissions (formulas and tools).

For broader variable pay strategy across roles, see our Incentive Compensation guide.

Common Commission Models

Different commission models balance risk and reward in different ways. Modern teams mix and match several sales commission models to fit roles, markets, and growth stages.

Straight Commission

Reps earn only when they sell; there is no base salary. This can work in highly transactional environments or for very senior reps who want maximum upside. Income volatility is higher, so it’s less common in SaaS or complex B2B motions.

Base Salary + Commission

The most common model for SaaS. A fixed salary covers core responsibilities; variable pay rewards closed business or other KPIs. An AE might have a 50/50 mix, while a CSM might sit closer to 80/20.

Tiered & Accelerator Models

Tiered plans start at one rate and step up at predefined thresholds (for example 5% up to quota, 7% once quota is hit, 10% above 120% attainment). Accelerators amplify this effect by increasing earnings as reps outperform.

Revenue vs. Profit-Based Models

Revenue-based plans reward top-line growth and are simple to explain. Profit-based plans (paying on gross margin or contribution) encourage healthy discounting and mix. Many teams start with revenue and add a profit guardrail later.

Team and Overlay Models

In long or complex sales cycles, multiple roles influence the outcome. Team and overlay models split credit across AEs, CSMs, SEs, and partners using clear rules so people collaborate instead of fighting over ownership.

To dive deeper into tiers, quotas, thresholds, and advanced structures, see our dedicated sales commission structure guide.

Eliminate calculation errors and disputes.
Provide real-time visibility for reps and managers.
Scale incentive programs across teams and regions.

Commission Rates by Industry (Benchmark Ranges)

Leaders often ask about typical sales commission rates for their segment. There’s no universal right answer, but directional benchmarks can help frame the discussion. Use the table below as a high-level reference for sales commission rates by industry, then validate against your economics.

Industry	Example Range (Commission on Eligible Value)	Notes
Software / SaaS	~8–12% of first-year ARR	Often tiered with accelerators for over-quota performance.
Real Estate	~2–3% of sale price	Usually split between listing and buyer agents.
Insurance	~10–15% of first-year premium	May include smaller residuals on renewals.
Automotive	~20–30% of gross profit per deal	Heavily influenced by dealership model and add-ons.
Retail & E‑commerce	~2– 10% of gross profit or sales value	Higher for high-touch, lower-volume categories.

Use these as illustration only, not as hard rules for your organisation’s sales commission percentage. A “good” average sales commission for your company depends on margin, sales cycle, and the role’s ability to influence results. Rather than chasing a generic sales commission average or worrying about what counts as a normal sales commission, model target earnings, quotas, and cost of sales together.

To see how different commission rates and pay mixes actually affect performance and culture, read The Impact of Commission-Based Pay on Sales Performance.

Role-Based Commission & Pay Mix (SaaS)

In SaaS, roles contribute differently to pipeline and revenue. That’s why many teams use role-based commission and OTE design instead of a one-size-fits-all plan. The goal of role-based OTE is to keep each role’s upside proportional to their influence on results and market value.

Role	Example Pay Mix (Base / Variable)	Example OTE (Annual)	Primary Metric(s)	Notes
SDR / BDR	70 / 30	$60k–$90k	Qualified opportunities, meetings set	Often paid a flat amount per qualified opportunity plus small accelerators.
Account Executive (AE)	50 / 50	$150k–$250k	New ARR, new logos	Commission usually tiered on new ARR with accelerators above quota.
Customer Success Manager (CSM)	80 / 20	$100k–$170k	Renewals, NRR, expansion	Variable tied to retention and expansion, sometimes split with AEs.
Sales Engineer (SE)	75 / 25	$140k–$200k	Influenced ARR, assisted opportunities	Often share a portion of AE commission or receive a per-deal bonus.
Partner / Channel Manager	70 / 30	$140k–$220k	Channelsourced ARR, partner-sourced pipeline	Plans can include bonuses for activating and growing partners.

Use these examples as starting points when designing your own On-Target Earnings ranges and KPIs & Metrics. The right mix balances affordability, competitiveness, and the behaviors you want to reward.

If you run a SaaS GTM, see our SaaS sales commission structure guide for role-specific examples and pitfalls. For a deeper look at SDR-specific plans, including example quotas and payouts, read SDR Commission Structure: How to Reward SDRs.

How to Calculate Sales Commission (with Examples)

If you’re explaining how to calculate sales commission to a stakeholder or a new hire, concrete examples do most of the work. Here are three simple patterns you can adapt the next time you need to calculate sales commission in a plan or payout review.

Example 1: Simple Percentage of Revenue

Plan: AE earns 10% of eligible new ARR.

If the rep closes $80,000 in new ARR this quarter at a 10% rate:

Commission = $80,000 × 10% = $8,000

Example 2: Tiered Commission with Thresholds

Plan: 5% on the first $50k in monthly sales, 7% on the next $50k, 10% above $100k.

If the rep closes $150,000 in a month:

Tier 1: $50,000 × 5% = $2,500
Tier 2: $50,000 × 7% = $3,500
Tier 3: $50,000 × 10% = $5,000
Total commission = $11,000

For more scenarios, Excel walkthroughs, and a comparison of tools, check out How to Calculate Sales Commissions: Formulas and Tools.

Example 3: Profit-Based Commission

Plan: 12% of gross profit on each deal.

If a deal generates $30,000 in revenue and $18,000 in gross profit:

Commission = $18,000 × 12% = $2,160

In your plan documentation, include at least one example per role and per major mechanic (tiers, accelerators, draws). This makes reviews faster and reduces confusion during payout cycles.

Draws, Clawbacks & Crediting Rules

Draws, clawback, and crediting policies have a huge impact on rep trust, even if they don’t change the headline rate.

Draws

A draw is an advance against future commissions designed to smooth cash flow for reps. Common patterns include:

Recoverable draws:
Advances that are paid back as commissions are earned. If earnings fall short, the balance may carry forward.
Non-recoverable draws:
Time-bound guarantees (often during ramp) that are not repaid if commissions don’t cover them.

Clawback

Clawback in sales commission plans allow the company to recover previously paid commission when a deal refunds or churns within a defined window (e.g., 90 or 180 days). To keep things fair:

Define which events trigger a clawback (refunds, non-payment, early termination).
Align data sources (CRM, billing, finance) so disputes can be resolved with facts.
Cap the lookback period so reps can plan with confidence.

Crediting Rules

Crediting rules specify who gets paid on which deals and in what proportion. They should answer questions like:

Who gets credit for renewals and expansions — AE, CSM, or both?
How are multi-region or multi-partner deals split?
What happens when roles change mid-cycle?

Document crediting rules clearly in your policy and summarize them in each role’s plan. This is one of the fastest ways to reduce disputes and keep focus on selling instead of arguing over ownership.

If you operate across multiple countries, read Legal Considerations for Structuring Sales Commissions Globally before finalizing your plan.

Best Practices & Common Mistakes

Well-run plans share a few traits. They’re simple enough to explain in a few sentences, fully documented, and supported by reliable data. Here are practical guidelines to follow — and traps to avoid.

Best Practices

Keep the formula understandable. A rep should be able to explain their plan on a single slide.
Align metrics to strategy: new ARR vs. renewals vs. margin — not just "deals closed."
Use realistic quotas based on historical performance and pipeline coverage.
Limit manual overrides; where they’re needed, document them and track usage.
Review plans at least annually (ideally quarterly) to stay aligned with market reality.
Connect the plan to broader motivation, culture, and fairness. See our Work Motivation guide.

To dig deeper into the motivational side of plan design, explore How to Motivate Sales Teams with Effective Commission Plans.

Common Mistakes

Over-complication: too many levers, tiers, and exceptions.
Hard caps that penalize over-performance and encourage sandbagging.
Frequent mid-year changes without clear rationale or communication.
Opaque crediting and clawback rules that trigger disputes after the fact.
Running complex plans in spreadsheets instead of purpose-built tools.

If these issues sound familiar, see Common Sales Commission Challenges and How to Fix Them for practical remediation examples.

When in doubt, simplify. A plan that’s slightly less “perfect” on paper but easy to understand will usually outperform a complex one in the real world.

Tools to Track & Automate Commissions

Manual spreadsheets can work for a tiny team, but they’re fragile once you introduce multiple roles, regions, and models. A missed formula or version mix-up quickly undermines trust — which is why many teams look to dedicated sales commission software as soon as plans become strategic.

The right tool acts as your live sales commission tracker — centralizing rules, data, and payouts in one place. Instead of emailing files back and forth, leaders configure the plan once and rely on sales commission tracking software to calculate commissions, route approvals, and publish statements automatically.

Many teams outgrow spreadsheets quickly and move to sales commission software that automates calculations and rep-facing dashboards.

Bentega is built for this. As your "Sales Commission Tracker Software" layer, Bentega lets you:

Model different plans and see cost and earnings before rollout.
Automate calculations across currencies, teams, and regions.
Give every rep a real-time view of attainment, commission, and expected payout.
Maintain audit-ready histories for Finance, HR, and leadership.

Ready to move beyond spreadsheets? Book a demo to see how Bentega can automate your commission workflow end-to-end.

Implementation Checklist (Steps)

Use this checklist as a step-by-step guide when (re)designing your plan. It’s intentionally high level so Finance, Sales, and HR can align quickly.

Define the goal of the plan.
Are you optimizing for new ARR, margin, renewals, expansion, or a mix? Write this in one sentence.
Choose the model.
Decide whether you’ll use straight commission, base + commission, tiered, profit-based, or a hybrid.
Set pay mix and OTE.
For each role, define target OTE, base/variable split, and how it compares to market benchmarks.
Select metrics and crediting.
Pick 2– 4 KPIs per role, define eligibility, and document who gets credit for which deals.
Define rates, thresholds, and policies.
Lock in tiers, sales commission plans mechanics, draw and clawback rules, and any caps or floors.
Create documentation.
Ship a one-page plan summary per role with examples, timelines, and dispute processes.
Automate and review.
Implement the plan in software, monitor results for a full cycle, then refine based on attainment and feedback.

Running a smaller team? See Sales Commission Structure for Small Businesses for examples tailored to small companies.

One‑Page Plan Template (Copy & Adapt)

Field	Details
Plan name	FY2026 AE Commission Plan
Objective	Drive new ARR with healthy margins.
Eligibility	US Commercial AEs.
Pay mix & OTE	50/50 pay mix; OTE $200,000 (Base $100,000; Variable $100,000).
Measures	New ARR (80%), Gross Margin (20%).
Rates	8% to $300k ARR; 10% to $600k; 12% >$600k (monthly).
Accelerator	+2pp on all tiers at ≥110% QTD attainment.
Draw	Recoverable ramp draw: $3,000/month months 1–3.
Clawback	6-month refund/churn window.
Crediting	AE 60% / SE 40% on qualified deals; expansion credit to CSMs.
Approvals & audits	All exceptions require VP Sales + Finance sign-off in Bentega.
Examples	Publish monthly examples for 50%, 100%, 120% attainment.

What is a sales commission?

A sales commission is variable pay that a rep earns when they hit predefined performance metrics such as revenue, bookings, or renewals. It’s designed to align individual effort with company growth.

How do you calculate sales commission?

Most teams multiply eligible revenue (or profit) by the commission rate, then adjust for tiers, accelerators, and any draws or clawbacks. The key is to define “eligible” clearly and publish example calculations in your plan.

What are common sales commission models?

Popular models include straight
commission, base salary plus commission, tiered structures with accelerators, profit-based
commissions, and team or overlay models where credit is shared across multiple roles.

What is a good sales commission rate?

It depends on your industry, margins, and pay mix. Instead of copying a headline rate, start from target OTE and quota: what does a fully ramped rep earn at 100% attainment, and is that sustainable given your unit economics?

What is the average sales commission in SaaS?

There is no single standard, but many SaaS companies target total variable pay around 40–50% of OTE for core seller roles. Within that, actual rates vary based on ACV, segment, territory, and whether plans are tiered.

What is a draw in commissions?

A draw is an advance against future commissions that provides income stability during ramp or seasonal fluctuations. Draws can be recoverable (paid back
from future earnings) or non-recoverable (forgiven if targets aren’t met).

What is a clawback?

A clawback is a mechanism that lets the company reclaim previously paid commission when a deal cancels, refunds, or churns within a set period — for example, if a customer doesn’t pay or cancels the contract early.

How can I automate sales commission payouts?

To automate sales commission, move your plans into a dedicated platform like Bentega. Connect data sources (CRM, billing, payroll), configure your rules once, and let the system handle calculations, approvals, and rep-facing statements.

Key Takeaways

Clear, well-communicated commission plans align sales behavior with company goals and make cost of sales predictable.
Start with simple models and transparent formulas; use tiers and accelerators to reward over-performance without over-complicating the plan.
Calibrate rates and OTEs by role and industry, then validate against your own margins and historical attainment.
Document draw, clawback, and crediting rules up front to reduce disputes and build trust.
Automating commissions with Bentega gives leaders

Automate Sales Commissions with Bentega

Designing the right plan is only half the battle. The other half is paying it out accurately, on time, and with full transparency — every single period.

Bentega helps you move from scattered spreadsheets to a single, trusted system for incentive compensation:

Model and compare different commission plans before you launch them.
Automate calculations, approvals, and payout files across teams and currencies.
Give reps real-time dashboards so they always know where they stand and what’s next.
Provide Finance and HR with clean, audit-ready data and clear forecasting.

If you’re ready to simplify commission management, reduce disputes, and make incentives a genuine growth lever:

Book a Demo to see Bentega in action.
View Pricing to explore plans and options.
Explore Features to learn more about how Bentega supports commissions, bonuses, SPIFs, and beyond.

Build tiered, flat, or hybrid plans in minutes.
Simulate payouts and model scenarios instantly.
Integrate payroll and CRM data seamlessly.
Provide real-time dashboards for every rep.