A B2B sales compensation plan defines how sales reps earn money: their base salary, the variable component (commission), and the triggers, rates, and caps that govern the variable payout. The comp plan is one of the most powerful behavioural tools a sales leader has. Reps optimise for what makes them money -- which means if the comp plan rewards the wrong behaviour (bookings instead of collected cash, quantity over quality, short-term deals that churn), the team will deliver the wrong outcomes consistently and rationally.
The components of a B2B sales compensation plan
On-Target Earnings (OTE)
OTE is the total compensation a rep earns when they hit 100% of quota. It is split between base salary and variable (commission). For most B2B SaaS AE roles, the split is 50/50 (half base, half variable). Roles with longer sales cycles and more complex deals typically have higher base components (60/40 or 70/30) because reps need financial stability during long deal cycles. SDR and BDR roles often have a 70/30 or 75/25 base-to-variable split because their output (meetings booked) is more directly within their control.
Quota
Quota is the revenue target the rep is expected to hit to earn 100% of their variable pay. Common quota-setting approaches: top-down (divide the company revenue target across the team); bottoms-up (build from territory potential and rep productivity benchmarks); market rate (set quota at X times the rep's OTE, where X is typically 4-8x for most B2B SaaS roles). Quota should be achievable by 60-70% of the team -- if less than 50% of reps hit quota consistently, the quota is too high and will drive attrition.
Commission rate and triggers
The commission rate is the percentage of deal value (or ARR) the rep earns on each closed deal. Common structures: flat-rate commission (same percentage on all deals regardless of size), tiered commission (higher rates above certain revenue thresholds), and accelerators (commission rate increases above quota to reward over-performance -- a rep who hits 120% of quota might earn 1.5x or 2x the commission rate on the incremental revenue). Triggers determine when commission is paid: at booking (contract signed), at invoicing, or at cash collection. Pay on cash collection rather than bookings to align rep incentives with revenue quality.
B2B sales compensation in India: typical structures
India B2B SaaS sales compensation at growth-stage companies: SDR/BDR: INR 5-10 LPA base + INR 2-5 LPA variable (OTE INR 7-15 LPA). AE (Account Executive): INR 10-20 LPA base + INR 10-20 LPA variable (OTE INR 20-40 LPA). Senior AE / Enterprise AE: INR 20-35 LPA base + INR 20-35 LPA variable (OTE INR 40-70 LPA). Sales Manager: INR 20-30 LPA base + team override commission of 2-5% of team attainment above quota. Equity (ESOPs) is increasingly offered at Series A+ companies and adds 10-20% to total compensation value for long-tenure reps.
Common mistakes in B2B sales compensation design
- Paying on bookings rather than cash: creates incentive to close deals that churn before first payment
- Uncapped commissions without accelerators: reps sandbagging deals to move them into the next quota period once they have hit cap
- Changing comp plans mid-year: destroys trust and causes rep attrition more reliably than almost any other management action
- Identical plans for different roles: a hunter (new business AE) and a farmer (account manager focused on expansion) should have different plans that incentivise their different objectives
- No accelerators above quota: without upside for over-performance, top reps have no incentive to push past quota and will coast once they hit it
Frequently asked questions
- What is a B2B sales compensation plan?
- A B2B sales compensation plan defines how sales reps earn money: their base salary, variable component (commission), and the triggers, rates, and caps that govern variable payout. A well-designed comp plan makes target behaviour (closing the right deals, with the right customers, at the right margins) the path of least resistance for reps. The key components are OTE (total target earnings), base-to-variable split, quota, commission rate, accelerators for over-performance, and payment triggers (when commission is paid).
- What is a good OTE to quota ratio for B2B sales?
- The standard OTE to quota ratio for B2B SaaS is 4-8x -- meaning a rep earning INR 30 LPA OTE should carry a quota of INR 1.2-2.4 Cr in ARR. Ratios below 4x suggest quota is too low (the company is overpaying for sales productivity) or OTE is too high. Ratios above 8x suggest quota is too high and will drive attrition. The right ratio depends on deal complexity, sales cycle length, and market maturity -- enterprise deals with 6-12 month cycles typically justify ratios of 4-5x, while high-velocity SMB sales justify 6-8x.
- How do you set sales quota in B2B?
- Common approaches to setting B2B sales quota: top-down (divide the company revenue target by the number of reps, adjusted for territory size and rep tenure); bottoms-up (build from territory potential -- how many ICP companies are in the territory, at what win rate and average deal value?); and market rate benchmarking (set quota at 4-6x OTE, benchmarked against industry data for your role and deal size). Quota should be achievable by 60-70% of the team in an average quarter. Less than 50% consistently hitting quota signals the quota is unrealistic; more than 80% hitting suggests the quota is too low.
- Should B2B sales commission be paid on bookings or cash?
- Pay on cash collected (or at minimum on invoice paid) rather than on bookings (contract signed). Paying on bookings incentivises reps to close deals that look good on paper but have high risk of non-payment or early churn -- particularly from weak-fit customers who were pushed through the sales process too aggressively. Paying on cash aligns rep incentives with revenue quality. A common hybrid: pay 50% at contract signing and 50% at first payment collection -- this gives reps some immediate reward while aligning incentives with cash quality.
Keep reading
- Sales commission: structures, rates, and how to design a plan
- Sales quota: meaning, types, and how to set one for your team
- B2B sales hiring: how to hire sales reps and leaders who close
- B2B sales team: how to structure, hire, and scale a sales organisation
- What is an Account Executive (AE)? Role and responsibilities