Best commission structures for b2b saas sales teams can make or break your growth. You know how it goes – you hire talented reps, give them a decent base salary, and then watch deals slip or motivation drop because the incentives just don’t line up with what your business actually needs.
Many UK entrepreneurs building SaaS companies struggle with this. Your team chases the wrong deals, or top performers leave for better packages elsewhere. Getting the pay mix right helps you attract solid people, keep them focused on recurring revenue, and scale without burning through cash.
In this article, we’re going to be taking a look at best commission structures for b2b saas sales teams, and how you can build one that actually drives results for your business. If you would like to find out more, feel free to read on.
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Why Getting This Right Matters for Your Business
Your sales team is the engine for growth in B2B SaaS. But without the right rewards, even good reps underperform. In the UK, where employment costs and talent competition are real, a thoughtful commission plan helps you stay competitive while protecting your margins.
Best Commission Structures for B2B SaaS Sales Teams:Think about it. A mismatched structure might push reps to close any deal quickly, leading to high churn later. Or it could leave them too comfortable on base salary with little upside. Either way, your ARR suffers.
We see founders waste months tweaking plans after seeing poor results. Starting with proven approaches saves time and money.
Common Best Commission Structures for B2B SaaS Sales Teams
Several models work well depending on your stage and deal size. Most UK SaaS companies lean towards a mix of base salary and variable pay.
The classic is the 50/50 or 60/40 split between base and on-target earnings (OTE). For example, a rep with £100k OTE might have £50k-£60k base and the rest in commission when they hit quota. This gives stability while rewarding performance.
Base salary plus commission remains popular because it balances risk. Reps have security to focus on longer sales cycles typical in B2B, while you tie upside to results.
The Base Plus Commission Model in Practice
This is often the best starting point for beginner and intermediate teams. Set a clear quota based on your average deal size and sales cycle – commonly 4-6x the variable pay component.
For instance, a mid-market AE in the UK might target £400k-£600k in new ARR annually. Commission could sit at 8-12% of first-year ACV for new business.
Payouts usually happen in stages: part on signature, the rest after the customer pays or goes live. This protects your cash flow. Many companies add a short clawback period if the deal churns within 90-180 days.
Using Tiered Commissions and Accelerators
To keep momentum high, add tiers. Reps earn a standard rate up to quota, then a higher “accelerator” rate beyond it.
Common setup: 8-10% up to 100% of quota, jumping to 12-15% above. This motivates your best performers without increasing base costs.
Accelerators work especially well in SaaS because they reward overachievement on expansions and upsells. Your team starts hunting bigger opportunities once basic targets are met.
Best Commission Structures for B2B SaaS Sales Teams: Renewals and Expansions
Pure new logo focus can hurt long-term health. Smart plans include incentives for renewals and customer growth.
Account managers might earn 3-6% on renewals, while AEs get bonuses for expansions. This keeps everyone thinking about lifetime value, not just the first sale.
Some companies pay residual commissions on MRR as long as the customer stays. It creates a nice annuity effect for reps and aligns with your recurring revenue goals.
Check resources from SaaStr for more on balancing new and existing revenue. Explore SaaStr compensation insights.
UK-Specific Considerations
In the UK, factor in employment laws, National Insurance, and pension contributions. Commission counts as earnings, so plan for that in your budgeting.
Many founders work with specialists to ensure plans comply with HMRC rules around variable pay. Transparency matters too – clear, written plans reduce disputes.
Consider your sales cycle length. UK enterprise deals often take 3-6 months, so quarterly or annual quotas make more sense than monthly ones for most teams.
Setting Quotas and Measuring Success
Quotas should feel challenging but achievable. Base them on historical data, market conditions, and your growth targets. Involve your team in the conversation where possible – it builds buy-in.
Track key metrics like ramp time for new hires, win rates, and sales efficiency. Tools that integrate with your CRM help automate calculations and payouts.
Salesforce offers good guidance on modern incentive plans. Learn more about Salesforce sales incentives.
Avoiding Common Mistakes
Don’t make plans too complicated. If reps need a spreadsheet to understand their pay, you’ve gone wrong. Keep it simple and communicate changes clearly.
Watch for unintended consequences. Heavy new business focus might encourage discounting or poor-fit customers. Balance it with quality metrics.
Also, review your plan yearly. What worked at £1m ARR might not fit at £5m. Adjust as your business evolves.
Building a Plan That Fits Your Stage
Early-stage teams often use higher commission percentages to attract hungry reps with limited budget. As you grow, you can shift towards more base pay for stability.
Test elements like SPIFs (sales performance incentive funds) for specific behaviours – for example, bonuses for multi-year contracts or quick onboarding.
The goal is alignment: your reps win when the company wins through healthy, growing customers.
We hope that you have found this article enlightening in some way. Take these ideas, adapt them to your own SaaS business, and start building a commission structure that supports the growth you want. Your sales team – and your bottom line – will thank you for it.
