How to Build a Killer Sales Commission Plan for Your Early-Stage SaaS Startup
Intro
When you're building a SaaS startup, the sales comp plan probably doesn’t feel as exciting as product launches or new logos. But here’s the truth: the way you pay your first reps can make or break your momentum.
Get it right, and your reps become extensions of the founding team — selling hard, learning fast, and closing the right kinds of deals. Get it wrong, and you're either overpaying for the wrong behavior or under-motivating the people trying to build your revenue engine.
Let’s fix that.
1. What Should You Incentivize Your First Sales Reps On?
Early reps aren’t just closers. They’re guinea pigs, product whisperers, and feedback machines.
So while revenue matters, it’s not the only (or even best) metric to optimize for at the start.
Here’s what works early on:
- Reward logo wins, even if the deal size is small. Validation > valuation (for now).
- Use “spiffs” — small bonuses, gift cards, team shoutouts — to inject short bursts of motivation.
- Keep it simple. If your reps are pulling out calculators, your plan’s too complicated.
Remember: early traction is more about motion than perfection. A comp plan that encourages hustle, feedback, and fast iteration will serve you better than one that mimics enterprise math.
2. Align Comp With What Actually Matters to the Business
In the earliest stage, every deal counts — but not every deal is worth the same.
You might want to emphasize:
- Monthly Recurring Revenue (MRR) over Total Contract Value (TCV)
- Strategic accounts over random wins
- Multi-year commitments over one-off trials
A few ways to do this:
- Tiered commission rates for larger deals
- Bonus for closing logos in target segments
- Higher payouts for multi-year contracts or prepayments
Your goal? Steer your sales behavior toward what makes the company more valuable.
3. Should You Cap Commissions?
Short answer: try not to.
Caps are like speed limits — reps will drive slower just to stay within them.
But if you absolutely need a cap (especially in the earliest, unpredictable months), make it generous. Think:
- 300–400% of base salary
- Clear rules for exceptions
- Plan to remove the cap once you have better sales data
A high ceiling still gives reps something to chase — without breaking your runway.
4. Tiered Structures, Accelerators & Equity: Think Like a Long-Term Operator
Once you’ve got traction, you’ll want to:
- Recognize top performers
- Encourage reps to push beyond quota
- Build a retention-friendly plan
Here's how:
- Tiered commissions: 6% → 8% → 10% as they hit milestones
- Accelerators: extra payout past 100% quota
- Equity: give reps skin in the game
These aren’t just incentives — they’re culture-shaping tools. A top rep with equity thinks differently than a mercenary who’s just chasing this quarter’s bonus.
5. Use Commission Software to Avoid Headaches and Errors
Manually tracking commissions is a trap. Errors happen. Payouts get delayed. Trust erodes.
Sales commission software solves that by:
- Automating calculations
- Integrating with your CRM (like Salesforce or HubSpot)
- Letting reps see their earnings in real time
- Making tweaks without starting from scratch
If you’re already using Excel, great. But once you hit 3+ reps or 2+ variables (like tiers or spiffs), it’s time to upgrade.
6. Your Plan Will Change — That’s a Feature, Not a Bug
The plan you start with won’t be the one you end up with. That’s normal.
But here’s how to evolve without losing your team:
- Review monthly: quotas, win rates, average deal sizes
- Ask your reps: what’s working, what’s confusing, what feels unfair
- Roll out changes slowly: pilot test with a few reps before going wide
- Explain the “why” behind every change
Transparency builds trust. And trust builds momentum.
Final Thoughts
Early-stage SaaS is all about alignment. Between product and market. Between team and mission. And between incentives and behavior.
If your sales comp plan feels misaligned, don’t wait to fix it. The earlier you course-correct, the better the outcomes — not just in deals closed, but in the culture you’re building.
And if you're tired of fiddling with formulas, or worse — fighting over payouts — it might be time to let software do the heavy lifting.
Because while you build the rocket ship, your commission plan should just… work.
