Dear SaaStr: What is a Normal Commission for an Account Exec as a Percentage on Revenue of a Deal?
For SaaS account executives, commissions typically range from 8-10% of the first-year Annual Contract Value (ACV) of a deal.
- This is pretty standard for inside sales reps working on mid-market or enterprise deals.
- For smaller deals, or in lower-margin businesses, it might be a bit less.
All-in, including base salary and bonuses, the total compensation for an AE usually ends up being about 20-25% of the revenue they close annually.
If you’re paying much more than 25%, it’s likely unsustainable unless you’re heavily subsidizing with venture capital, or subsidizing it in part with self-serve and other lower cost customers.
If you’re structuring a comp plan, keep in mind that the best reps often close 4-5x their On-Target Earnings (OTE) at scale.
So, if an AE has a $150k OTE, they should be closing $450k-$600k in ACV annually to make the math work. Anything less, and you’re either overpaying or underperforming.
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