Dear SaaStr: What is the Standard Commission Percentage in SaaS?
In B2B, the standard commission percentage for sales reps typically falls around 10% of the Annual Contract Value (ACV) for deals they close.
Sometimes a bit more for orgs rapidly scaling and that are well-funded, but rarely too much more.
This is part of a broader On-Target Earnings (OTE) structure, where the rep’s total comp (base + commission) is designed to be about 20%-25% of the total revenue they bring in annually.
For example:
- If a rep closes $1M in annual deals, their OTE might be $200k-$250k, split roughly 50/50 between base salary and commission. That means $100k-$125k of their comp would come from commissions, which aligns with the 10%-12.5% of ACV range.
Reps are expected to close 4x-5x their OTE in bookings after the earliest days at least. Sometimes 3x in high volume, lower OTE SMB models.
It ensures the business model remains viable and the sales team is accretive — while still highly incentivizing the reps.
If you’re setting this up, you can also include accelerators for overperformance—e.g., paying 15%-20% commission on deals closed above quota. This keeps top performers motivated to push beyond their targets.
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