Common Sales Commission Models Explained

Choosing the right commission model isn’t about copying what others do, it’s about matching the sales cycle, role, and market conditions.

At Employmate, we’ve benchmarked compensation plans across industries and we’ve learned is that the most successful businesses design their models with clarity, motivation, and sustainability in mind.

Here are seven common models, when to use them, and what to watch out for.

1. Base + Percentage Commission

How it works: A fixed salary plus a percentage of revenue or gross profit.
Best for: Most roles, provides stability and motivation.

Example:

• Inside Sales: $55k base + 8% commission

• Field Sales: $65k base + 6% on territory sales

Employmate Insight: Over-reliance on this model can stall high performers. Pair it with accelerators to keep top talent motivated.

2. Tiered / Accelerating Rates

How it works: Commission rates increase as quotas are hit.
Best for: Encouraging stretch goals and rewarding high achievers.

Example:

• 0–75% of quota: 4%

• 75–100%: 6%

• 100–125%: 8%

• 125%+: 12%

Employmate Insight: We see this working especially well in SaaS and financial services where exceeding quota compounds business value.

3. Flat Rate Per Achievement

How it works: Fixed payment per deal or milestone.
Best for: High-volume, transactional sales.

Example:

• $150 per qualified appointment

• $500 per new customer

Employmate Insight: Great for SDRs but dangerous for complex sales. Flat incentives ignore deal quality.

4. Revenue Share / Residuals

How it works: Ongoing percentage of customer revenue.
Best for: Roles focused on long-term retention and renewals.

Example:

• Account Manager: 10% year one, 5% renewals

• BDM: 15% of partnership revenue

Employmate Insight: Powerful for subscription businesses but only sustainable if margins allow.

5. Gross Margin Commission

How it works: Based on profit margin, not revenue.
Best for: Protecting margins and discouraging discounting.

Example:

• $100k sale with $30k margin

• 20% commission rate → $6k payout

Employmate Insight: Underused but essential where price competition is high.

6. Team / Split Commissions

How it works: Multiple contributors share the payout.
Best for: Complex or team-based sales processes.

Example:

• 30% to SDR (appointment setter)

• 70% to AE (closer)

Employmate Insight: Works best when splits are clear upfront. Without transparency, disputes kill motivation.

7. Activity-Based Bonuses

How it works: Rewards tied to specific activities.
Best for: Early-stage reps or pipeline building.

Example:

• $50 per qualified meeting

• $100 per demo

• $200 per opportunity advanced

Employmate Insight: Ideal for onboarding and new hires. But if overused, it can distract from closing.

Key Takeaway

Commission models are tools, not templates. The right choice depends on deal size, sales cycle, and role expectations. Many of the best-performing companies we work with use a hybrid approach combining base + commission with accelerators or retention bonuses.