How To Actually Build a Sales Comp Plan
Sales compensation is one of those topics every leader thinks they’ve nailed — until it starts backfiring. A plan that’s too complex confuses reps. One that’s too simple risks leaving money on the table. Somewhere in between lies the sweet spot: clarity, motivation, and growth.
To unpack how to actually get there, we sourced expert advice from three seasoned sales experts:
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Mike Pritchett, founder of BuzzTrail and serial entrepreneur who’s built and sold multimillion-dollar SaaS businesses across seven countries.
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David Wilkins, co-founder of SDR Leaders (EMEA, USA, and APAC), known for helping global sales teams scale performance through practical, no-fluff frameworks.
You’ll Learn:
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Why simplicity is your strongest motivational tool.
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How to design comp plans that drive the right behaviours.
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The psychology of incentives — and why fairness beats flashiness.
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How to balance base pay, commission, and culture.
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When to review, reset, or double down on your comp strategy.
If you lead a revenue team and want to make your salespeople more productive, predictable, and motivated — this is the playbook to start with.
Let's dive in!
1. Simplicity Isn’t Optional — It’s the Golden Rule
The best sales compensation plans are simple enough to explain on a napkin. Too many companies fall into the trap of building complex models that look great in a spreadsheet but fail in real life.
“Keep it simple. I built a $10 million ARR business on a single rule: reps got half of the first month’s revenue. Everyone understood it, and everyone was happy.” — Mike Pritchett
Complexity doesn’t just confuse—it kills motivation. Salespeople are “coin-operated,” as Wilkins put it. If reps can’t see how their daily activity translates into pay, they disengage.
“The last thing you want is a rep closing a deal, already spending the commission in their head, only to find out at month-end they were wrong.” — Mike Pritchett
A simple plan ensures every rep knows the score, keeps the company aligned, and removes friction from selling.
Tactic:
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Define one clear payout formula.
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Remove unnecessary accelerators and exceptions.
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Communicate the plan with a single visual, not a 10-slide deck.
2. Never Move the Goalposts
Nothing destroys trust faster than changing a comp plan mid-year.
“I’ve seen teams double quotas mid-year because reps over-achieved — and it destroyed trust overnight.” — David Wilkins
When leaders change targets after success, they send a clear message: performance gets punished. Pritchett learned this firsthand.
“We brought in a CFO, added complexity, and suddenly everyone was confused — even when they were earning more. It felt like a punishment.” — Mike Pritchett
Once your plan is in market, lock it down for the fiscal year. Only adjust for new products or strategy shifts, and communicate early and clearly.
Tactic:
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Lock the plan for 12 months.
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Audit fairness quarterly, but avoid reactive tweaks.
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If something truly must change, tie it to a company-wide pivot, not one team’s overperformance.
3. Incentivise the Right Behaviour (Avoid the Cobra Effect)
Bad incentives create bad behaviour. When reps can game a plan, they will — not because they’re unethical, but because they’re human.
“If a salesperson can rig a system, they will.” — Mike Pritchett
Pritchett illustrated this with the “Cobra Effect.” When the British government offered bounties for dead cobras, locals began farming them to cash in. The same logic applies to sales incentives.
“You end up rewarding the wrong behaviours — like sandbagging deals or stuffing the pipeline — and you think you’re driving performance.” — Mike Pritchett
Wilkins saw this with SDR teams paid for booking meetings, not generating qualified pipeline.
“Don’t pay SDRs for activity — pay them for impact. A meeting that never happens or never converts isn’t value created.” — David Wilkins
Tactic:
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Reward behaviours that tie directly to revenue outcomes.
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Build guardrails against “gaming.”
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Define what “qualified” means, and ensure both SDR and AE agree.
4. Define What You Reward — and Why
Every comp plan should start from the top down — from business goals to team quotas.
“You’ve got to look at what the company needs — new logos, expansion, renewals — and build incentives that support that.” — David Wilkins
This is where data matters. Work backward from company revenue targets, calculate the pipeline required, and set quotas that reflect reality.
“The smartest leaders build comp plans backwards from revenue goals.” — David Wilkins
This prevents inflated expectations and ensures that everyone — from SDR to AE to CRO — is rowing in the same direction.
Tactic:
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Reverse-engineer revenue goals into activity expectations.
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Ensure comp ratios reflect pipeline influence (e.g., SDR vs AE).
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Update annually to reflect product and market maturity.
5. Pay for Teamwork, Not Turf Wars
Misaligned plans create internal competition instead of collaboration.
“If SDRs and AEs don’t see comp alignment, they’ll start gaming each other.” — Mike Pritchett
Wilkins recalled SDRs chasing low-value “training meetings” that ticked boxes but didn’t move deals forward. It’s what happens when incentives reward busyness, not business.
“You end up rewarding the wrong use cases. That’s not a growth culture; that’s chaos.” — David Wilkins
Tactic:
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Split incentives between SDR and AE based on contribution.
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Celebrate shared wins publicly.
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Don’t over-index on one role — collaboration is revenue fuel.
6. Salary vs. Commission: Striking the Right Balance
The best comp plans make reps secure enough to focus — but hungry enough to push.
“I want reps to live off their base — but I want them dreaming about their commission.” — Mike Pritchett
Wilkins shared results from their State of EMEA Sales Development survey:
“The ideal SDR ratio is 70/30. Anything lower, and you breed desperation.” — David Wilkins
A desperate rep will cut corners; a secure one will think strategically.
Tactic:
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Set base pay to cover living costs.
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Use commission as the aspirational driver.
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Balance ratios by role maturity (e.g., SDR 70/30, AE 50/50).
7. Should You Ever Do Commission-Only?
Commission-only sales models sound cost-efficient, but they rarely work.
“Every founder dreams of a room full of commission-only sellers. But that’s not a team — that’s a mercenary army.” — Mike Pritchett
Pure-commission reps often juggle multiple gigs, split focus, and disengage from culture.
“You can’t create belonging when everyone’s working three other gigs.” — Mike Pritchett
Unless you’re running a partner channel or agency model, your full-time reps need stability.
Tactic:
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Use commission-only for external partners, not core team.
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Prioritise engagement and learning over short-term savings.
8. Fairness and Consistency Build Culture
Compensation inconsistency breeds resentment. Even small disparities can spark comparison and distraction.
“You can’t have one rep on a bespoke deal and another on a standard plan — it just breeds distraction and comparison.” — Mike Pritchett
Transparency builds trust.
“Everyone should sing from the same song sheet — one goal, one plan, one payout model.” — Mike Pritchett
Tactic:
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Keep all full-time sellers on the same plan structure.
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Publish compensation philosophy internally.
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Treat exceptions as the enemy of culture.
9. Leadership’s Role: Set the Plan, Then Step Back
Once you’ve built a solid comp framework, resist the temptation to micromanage it.
“If founders or CROs don’t feel confident, get advice — but once the plan’s set, stop tinkering.” — Mike Pritchett
Wilkins agreed that every new exception undermines leadership authority.
“Every time you bend it for one person, you lose authority with the rest.” — David Wilkins
Tactic:
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Review annually, not reactively.
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Create one feedback cycle per year.
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Reinforce the plan’s logic in every sales meeting.
10. When to Review and When to Replace
Good comp plans evolve with the business — but not every quarter.
“Review annually, test quarterly, but only change if behaviour or economics demand it.” — David Wilkins
Signals it’s time to update:
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Overachievement above 200% (plan too easy)
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Widespread misses (plan too hard)
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Confusion in payout meetings (plan too complex)
A stable, trusted plan drives performance far more effectively than a perfect one that keeps changing.
TL;DR
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Keep comp plans brutally simple — one formula everyone understands.
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Never change plans mid-year — it destroys trust.
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Pay for impact, not activity.
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Design incentives that can’t be gamed.
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Align SDR and AE plans to reinforce teamwork.
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Build compensation backward from revenue goals.
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Don’t cap commission; cap confusion instead.
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Maintain fairness, transparency, and consistency.
❓FAQ - Building Sales Compensation Plans
How simple should a comp plan be?
A good rule of thumb: if your reps need a spreadsheet to calculate their paycheck, it’s too complex. Simplicity builds confidence. Reps should instantly know the result of every closed deal. The clearest plans tie activity to income transparently — ideally one formula, one slide, one line of logic.
Should SDRs be paid on meetings booked or pipeline generated?
Pipeline wins, every time. Paying on meetings booked encourages low-quality calls and no-shows. As Wilkins noted, “Don’t pay SDRs for activity — pay them for impact.” Reward the creation of qualified pipeline that leads to revenue, not volume for volume’s sake.
How can I keep reps motivated mid-year without changing the plan?
Don’t move the goalposts. Instead, introduce short-term “spiffs” or contests aligned to the existing plan. Recognise over-achievers publicly, refresh leaderboards, and introduce small rewards for milestone achievements. These keep energy high without undermining long-term consistency.
What’s a healthy base/commission ratio?
It depends on role and market maturity. For SDRs, 70/30 (base/variable) strikes the best balance between security and drive. For AEs, 50/50 keeps hunger alive while maintaining stability. Anything more aggressive can create financial stress that kills creativity and collaboration.
Should I cap commission?
No. Capping commission is effectively capping motivation. Top performers should be allowed to outperform and earn accordingly. If you fear runaway payouts, the problem isn’t overpayment — it’s underpricing or misaligned targets. Design for growth, not containment.
How often should comp plans be reviewed?
Quarterly reviews are healthy for feedback, but full redesigns should happen annually.
Use the data from year-end performance to inform next year’s structure. Changing too often leads to confusion and mistrust — and no rep sells well in uncertainty.
The difference between an average sales team and a great one isn’t just talent — it’s how clearly they understand what success looks like. When your comp plan is simple, fair, and consistent, performance becomes predictable, trust grows, and revenue follows.
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