Sales Commission Tier Modeler
Model base and accelerator payouts against attainment and margin.
At 120% attainment this rep earns $64,800, an effective 9.0%. Comfortably inside margin at 15%, the accelerator rewards over-performance without eroding profitability.
Accelerators should pay out of the extra margin over-attainment creates. If commission outruns margin growth, the plan incentivises unprofitable revenue.
About this calculator
An over-quota accelerator is meant to reward reps for pushing past 100% attainment, but if the accelerated rate outruns the margin that over-attainment actually produces, the plan starts paying reps to sell revenue that quietly loses money for the business. This modeler simulates a two-tier commission plan and checks the payout against deal margin, not just against revenue.
How to use it
- Enter annual quota, attainment as a percentage of quota, and deal gross margin as a percentage.
- Enter base commission rate, the quota percentage where the accelerator kicks in, and the accelerated rate that applies above that threshold.
- Read revenue closed, total commission, effective commission rate, and commission as a share of gross margin.
Methodology
Revenue closed is quota × attainment percentage. The threshold revenue (where the accelerator starts) is quota × the accelerator-threshold percentage.
Base portion is whichever is smaller, closed revenue or threshold revenue, revenue paid at the base rate. Accelerated portion is anything closed above the threshold, paid at the accelerated rate. Total commission is base portion × base rate + accelerated portion × accelerated rate.
Effective rate is total commission ÷ closed revenue, as a percentage, a blended rate across both tiers. Gross margin dollars is closed revenue × deal margin percentage; commission as a share of margin is total commission ÷ gross margin dollars.
The tool flags margin stress once commission consumes more than 25% of gross margin dollars. That threshold exists because accelerators are supposed to pay out of the extra margin over-attainment creates, if commission growth outruns margin growth as attainment rises, the plan is effectively incentivizing revenue that erodes profitability rather than rewarding genuinely profitable over-performance.
FAQ
Because revenue alone doesn't tell you whether a deal was profitable, a plan built purely on revenue accelerators can reward reps for closing low-margin deals just as generously as high-margin ones. Checking commission against margin catches cases where the accelerator is paying out faster than the deal economics can support.
There's no universal number, it depends on your margin structure, but if commission-as-share-of-margin consistently exceeds 25% at high attainment levels, the accelerator rate or threshold likely needs adjusting so over-performance doesn't erode deal profitability.
No, it uses one blended gross margin percentage across all closed revenue. If a rep's over-quota deals systematically carry lower margin than their base-quota deals, for instance from heavier discounting to hit a number, the margin stress this tool flags would understate the real risk.