How do I build a comp plan that pays for the strategy we actually have this year?

Five design rules worth memorising, including show causality and keep the payout cycle under 60 days, plus a business case method for setting targets from total team cost rather than from wishful top down math.

Compensation for SaaS Sales Organizations

From Winning by Design 15 min read

• With no proven LTV, keep combined SDR, AE and CSM OTE under 40 percent of year one revenue, or 60 percent at 2+ year LTV.
• A 1 in 5 win rate is the SaaS norm, versus 1 in 3 in perpetual license sales.
• Working the SDR model backwards: 40K variable over 150 leads is about 250 dollars per SQL, or 1,250 per closed deal.
• With a sales cycle up to 90 days, 90 days is the common onboarding period; complex products take six to nine months.

A deliberately contrarian first plan: cover the rep's fully loaded cost first, then pay 20 to 25 percent on everything above it, with no caps. Whether or not you adopt it, it forces you to think about sales as a profit centre.

A Framework For Your First SaaS Sales Comp Plan

From SaaStr by Jason Lemkin 9 min read

• Pay no commission at all until the rep has covered their own fully-burdened base and benefits.
• After that, pay 20 to 25 percent of every additional dollar of ACV, roughly double a BigCo rate.
• All-in, an inside rep takes home about 20 percent of the ACV they close, split about 50/50 base to bonus.
• Traditional big-company plans only start working around 25M to 30M ARR or 40 to 50 reps. Never cap commission.

From the Chennai-built comp platform that actually runs these plans for hundreds of companies. It gives the pay mix by role (50/50 for AEs, 70/30 for support roles) and the 4x to 6x OTE quota benchmark you can sanity check yourself against.

SaaS Sales Compensation Guide: How to Design Scalable and Fair Plans

From Everstage 18 min read

• Set quota at 4x to 6x OTE, lower multiple for SMB, higher for enterprise.
• Pay closing roles 50/50 base to variable; support roles run 70/30 or 80/20 toward base.
• Give new hires a 3 to 6 month ramp with prorated quota or a guaranteed draw.
• Only 21 percent of companies are happy with their comp plan and 53 percent of sellers miss quota.

Three concrete ways to handle the awkward case where the product sourced the deal, including a higher first contract rate with no expansion pay. It answers the specific question rather than talking about PLG in general.

How to build PLG sales comp plans

From QuotaPath 10 min read

• 58 percent of surveyed companies run a PLG model and 91 percent plan to push further into it.
• Most cap expansion commission eligibility at 12 months from the initial deal, some at the first 90 days.
• Paying 20 percent upfront is very high, and only makes sense when the account will clearly add users later.
• If 30 percent of free users convert without an AE, build in a cliff or decelerator so you are not paying for organic conversion.

This is the question stated as a principle: pay for the strategy you have chosen this year, not for whatever the product list happens to be. Long is blunt about how comp quietly drifts back to last year's plan.

Aligning sales compensation with strategy, not SKUs (with Stephen Long)

On Forma ai by Stephen Long 31 min