Comp plans are where your effort turns into money. And yet, most reps accept an offer after scanning the OTE, checking if there’s accelerators, and calling it a day.
That’s how people end up surprised by payout timing, unexpected clawbacks, or quota changes that quietly cut earnings in half.
If you’re evaluating a new role (or re-evaluating your current one), here’s a practical breakdown of what to look for in a comp plan, what’s actually negotiable, and how to protect yourself from unclear terms—before you sign.
Step 1: Don’t Start With OTE — Start With “How Do I Get Paid?”
OTE is a headline number. Your real earnings depend on the rules underneath it.
Ask yourself:
- What event triggers commission? (Signature? Invoice issued? Payment collected? Activation? Usage threshold?)
- How often do I get paid? (Monthly? Quarterly? Are there holds?)
- How predictable is the path to quota? (Territory quality, lead flow, product-market fit)
- What’s the actual time-to-cash? (You can “earn” commission in January and not see it until March/April)
Red flag: If the company can’t explain it simply, the plan is either overly complex—or intentionally vague.
Step 2: Understand the 5 Comp Plan Building Blocks
A solid comp plan can be summarized clearly in 5 parts. If any of these are unclear, you’re walking into risk.
1) Pay Mix (Base vs Variable)
- Common ranges: 50/50, 60/40, 70/30
- More variable = more upside, but also more exposure to changes
What to ask:
- “What percentage of reps hit quota last year?”
- “If I hit 80%, what do I take home?”
2) Quota & Attainment Expectations
Quota is only fair if it matches reality.
What to ask:
- “How is quota set?”
- “How many reps hit 100% last quarter?”
- “What’s ramp quota for new reps?”
Red flag: “Everyone can hit quota if they work hard.” That’s not an answer.
3) Credit Rules (What Counts Toward Your Number)
This is where companies quietly win.
Examples:
- Full credit vs split credit on multi-rep deals
- Credit based on bookings vs revenue
- Renewals credited to you or a separate team
- Expansion credit: full, partial, or only after activation
What to ask:
- “When do I get credit and how is it calculated?”
- “How do deal splits work if an AE, SDR, or partner is involved?”
4) Commission Rates & Accelerators
Accelerators are often where your upside is.
Look for:
- A clear rate at 0–100%
- Clear accelerators above 100% (and when they start)
- No “management discretion” language
Red flag: accelerators exist “but change each quarter.”
5) Payout Timing + Payout Mechanics
This one matters more than most reps realize.
A plan can be “great” but still painful if cash flow is delayed.
What to ask:
- “Is commission earned at booking but paid later?”
- “Are there payout holds, approvals, or adjustments?”
- “What happens if the customer churns/refunds?”
Red flag: You can’t tell exactly which deals became payouts and why.
Step 3: Review the Fine Print Like It’s a Contract (Because It Is)
Your comp plan letter should not be a vague PDF with hand-wavy language. It should be a clear agreement with every clause spelled out.
Here are the clauses you want written clearly:
✅ Plan changes
- Can they change quota mid-quarter?
- Can rates change mid-year?
- Does your plan reset if you move territories?
Negotiation angle: ask for “no mid-quarter changes” or changes only with written notice.
✅ Clawbacks & chargebacks
- Do you lose commission if a customer churns?
- What’s the time limit (30/60/90 days)?
- Is it capped?
Negotiation angle: limit clawback window or cap clawbacks.
✅ Dispute policy
- How do you challenge missing commission?
- What’s the timeline and process?
- Who approves corrections?
Negotiation angle: get a written SLA for disputes (e.g., resolved within 30 days).
✅ Eligibility + “must be employed on payout date”
This clause is common—and brutal.
If your commission is earned but the company says you must still be employed on payout date, you can lose real money after leaving.
Negotiation angle: confirm if commission is paid on earned deals even after termination (especially if you’re laid off).
✅ SPIFFs, bonuses, and “one-time incentives”
These often get left out.
Negotiation angle: ask for them to be documented, including eligibility and payment dates.
What’s Actually Negotiable? (Yes, You Can Negotiate More Than You Think)
Not everything is flexible—but a lot more is negotiable than companies admit.
Usually negotiable
- Base salary (especially if you’re strong or competing offers exist)
- Draws (guaranteed variable for first 3–6 months)
- Ramp quota + ramp commission protection
- Sign-on bonus (very common substitute when comp plan isn’t adjustable)
- Territory assignment / segment
- Accelerator trigger timing (quarterly vs annual)
- Clawback limits (window, cap, exclusions)
Sometimes negotiable (depends on company maturity)
- Commission rate changes
- Payout frequency
- Split rules
- “must be employed on payout date” clause
Rarely negotiable
- Entire comp plan design (bands, structure)
- Standard legal terms for equity plans
- Company-wide payout schedules
Pro tip: If they won’t change the plan itself, negotiate protection:
✅ guaranteed minimum earnings in the first 2 quarters
✅ signing bonus
✅ draw
✅ written ramp terms
The 10 Questions Every Rep Should Ask Before Signing
If you ask these and get confident answers, you’re ahead of 90% of candidates.
- What triggers commission? Booking, invoice, payment, or activation?
- When do I get paid? Monthly or quarterly? Any holds?
- How many reps hit quota last year? Last quarter?
- Is quota prorated during ramp? For how long?
- What happens if the customer churns/refunds? Clawbacks?
- Can the company change quota mid-period?
- How are splits handled? SDRs, overlays, partners, multi-AE deals
- How do you handle disputes? Process + timeline
- What does the commission statement show? Deal-level breakdown or lump sums?
- Can I see a sample payout statement or plan doc? (Red flag if they refuse)
The Biggest Red Flag: Lack of Transparency on Payouts
Comp issues aren’t just annoying—they’re financially damaging and emotionally draining.
When payouts aren’t transparent, reps experience:
- “I think I’m missing commission but can’t prove it”
- Confusing spreadsheets with unclear formulas
- Back-and-forth with finance or payroll
- Delayed fixes and retro payouts months later
- Distrust in leadership and comp fairness
The best sales orgs avoid this by giving reps deal-level visibility:
- exactly what counted
- exactly what paid out
- what didn’t count (and why)
- what changed and when
If a company can’t explain your payouts clearly, it’s a major risk signal.
What a Great Comp Plan Letter Looks Like
A great plan letter is:
✅ written clearly (not legalese)
✅ includes every clause that impacts pay
✅ defines terms (bookings, revenue, collections, churn, eligibility)
✅ shows example calculations
✅ includes payout timelines + dispute process
✅ includes change and clawback policies
If your plan can’t be understood without a private meeting with Finance… it needs work.
Best solution for Transparency of payouts
EasyComp helps sales organizations:
✅ Make payout logic easy to understand
Reps can see clear explanations of how commissions were calculated, deal by deal, with the supporting data and math.
✅ Reduce errors and “commission surprises”
Automation and structured rules reduce spreadsheet mistakes, inconsistent logic, and last-minute payroll fixes.
✅ Create clear comp plan documents
Plans and clauses are documented clearly so reps know:
- how credit is assigned
- when payouts happen
- how adjustments work
- what happens in edge cases
✅ Build confidence and reduce rep churn
When reps trust the system, they sell harder—and stay longer.
Comp shouldn’t be a black box. It should be a scoreboard.
Final Take: Choose the Plan You Can Predict
Sales is already hard. Your comp plan shouldn’t make it harder.
A great comp plan doesn’t just offer “high OTE.”
It offers clarity, consistency, and confidence—so you can focus on selling, not chasing payroll.
When evaluating your next role, remember:
- OTE is marketing
- payout rules are reality
- transparency is everything
If you can’t explain the plan in 60 seconds, don’t sign it without getting it clarified in writing.
