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Commission
Sales Commission is the variable portion of a salesperson's compensation, paid based on their performance against quota. It is the primary financial incentive for closing deals. Commission structures vary widely, including flat rate, tiered, accelerator, and residual models.
Pay for Performance
The "Coin-Operated" nature of sales. Commission drives behavior. If you pay for new logos, reps hunt. If you pay for retention, reps farm. Designing the right plan is critical to strategy execution.
Standard Split: 50/50 (50% Base, 50% Commission at OTE). Accelerators: Higher % payout after hitting 100% quota (e.g., 10% up to quota, 15% after). This rewards top performers disproportionately.
Clawbacks and Draws
Clawback: Taking back commission if the customer churns early (<90 days). Protects the company. Draw: An advance on future commissions (Recoverable) or a guaranteed minimum (Non-recoverable) for new hires ramping up.
SalesMind AI and Commission
SalesMind AI helps reps maximize their commission checks by increasing their Sales Velocity. More deals closed faster = higher payout. For managers, it provides the data transparency needed to calculate complex commissions accurately without disputes.
Frequently Asked Questions
What is a "Bluebird"?
A deal that falls into a rep's lap with little effort (e.g., an inbound lead that is ready to buy). Managers sometimes exclude these from full commission.
Are commissions taxed differently?
In many countries, yes, or withheld differently. They are "supplemental income". But ultimately, it's all income at tax time.
What is a "Cap"?
A limit on total commission. Good sales plans are "Uncapped" - you want your top rep to make more than the CEO if they bring in that much revenue.
Related Terms
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