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Lab
Put in a sales pay plan: base salary, commission, quota and the higher rate paid above quota. See what it pays in a year.
Monthly, before tax: $13,333.33. Commission: $80,000.00. Commission at 100% of quota: $80,000.00, on a base of $80,000.00.
Effective commission rate 10% of quota.
| Attainment | Commission | Total |
|---|---|---|
| 50% | $40,000.00 | $120,000.00 |
| 75% | $60,000.00 | $140,000.00 |
| 100% | $80,000.00 | $160,000.00 |
| 125% | $100,000.00 | $180,000.00 |
| 150% | $120,000.00 | $200,000.00 |
Still Building
On-target earnings (OTE) are base salary plus the commission paid when you hit exactly 100% of quota. If you enter OTE, the base share is the percent of it that is salary. The rest is commission.
At or below the floor, commission is zero. Between the floor and 100%, it rises in a straight line to the full commission. Above 100%, each extra dollar is paid at the plan rate times the accelerator. An accelerator of 1.5 pays one and a half times the plan rate on everything above quota. A cap then limits the total commission.
The effective commission rate is commission divided by quota. Monthly pay is annual pay divided by 12, before tax. The table runs the same formula at 50, 75, 100, 125, and 150% attainment.
The formula leaves out draws (advances on future commission), SPIFs (short-term bonus contests), team quotas and clawbacks. Results are grouped into four attainment bands: under 75%, 75 to 99%, 100 to 124%, or 125% and above.