Worked example: $310K closed against a $200K quota
The first $200K pays the 8% base rate — $16,000. The remaining $110K pays the accelerated 12% (8% × 1.5) — $13,200. Gross commission is $29,200, an effective 9.4% blended rate. If the rep had been paid a flat 8%, the same quarter would have earned $24,800 — the accelerator added $4,400, which is exactly the point of the design.
- • Accelerators typically start at 100% of quota; some plans add a second kicker at 120–150%.
- • Cap plans carefully — uncapped accelerators are the norm in SaaS and a major recruiting lever.
- • Draws are common in ramping periods; non-recoverable draws are guaranteed pay.
Flat vs tiered vs accelerator
Flat rates are simple but reward coasting once quota is hit. Tiered rates (5% to $100K, 8% beyond) smooth the curve. Accelerators multiply the base rate above quota, which concentrates payout where the business values it most. Whatever the structure, reps should be able to compute their check on a napkin — complexity kills motivation faster than a low rate.
FAQ
What is a good commission rate?
It depends on margin and salary mix. SaaS AEs typically earn 8–12% of ACV, insurance agents 5–20% of premium, and real estate agents 2.5–3% of sale price split with a broker. The right test is on-target earnings: commission at 100% of quota plus base should match market pay for the role.
How does a draw against commission work?
A draw is an advance paid during slow periods or ramp. A recoverable draw is subtracted from future commission; a non-recoverable draw is not. If you earn $8,000 with a $2,000 recoverable draw outstanding, your check is $6,000.
Is commission taxed differently?
The IRS treats commission as supplemental wages. Employers usually withhold a flat 22% federal rate (37% above $1M), plus Social Security, Medicare, and state tax. Your actual liability settles at filing — withholding is not the tax.
Should accelerators be capped?
Usually no. Caps protect the budget but demotivate top performers at exactly the moment they are most productive. If cost control matters, raise the accelerator threshold instead of capping payout.
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