A commission plan is an instruction, not a reward
Sales teams optimize for what they get paid for. If the commission only rewards closed volume, you can expect aggressive discounts and customers outside the target profile. If it rewards margin, reps defend the price.
The unwanted behavior is almost never a character flaw — it's usually a rational response to what the plan pays for.
The most common models
Every model comes with a side effect. The choice is about which side effect the company is willing to live with.
- Percentage of the sale: easy to understand, tends to encourage discounting
- Percentage of the margin: protects price, requires margin to be visible to the rep
- Quota-based with accelerators: drives effort at the end of the period, can lead to deal hoarding
- By funnel stage: useful for SDRs, but fragments responsibility for the result
Rule of thumb: if reps can't calculate it, the plan is bad
A plan that a rep can't work out in their head halfway through the month doesn't steer behavior — it only produces surprises on payday and arguments afterward.
Complexity in a commission plan is usually a sign that the company is trying to fix, through compensation, a problem that's really about process or qualification.