The Sales Management Association’s incentive compensation plan template library provides spreadsheet templates for commonly used sales compensation plans. Members may find this library useful as a starting point when customizing their own sales organization’s sales compensation plans. These templates may be used by current members at the corporate and individual level. How to access these…...
Commission-Based Incentive Compensation Plans
These commission plans have a single performance measure, and can be used with or without a base salary. These are best suited for volume-oriented performance pay – in rewarding achievement of sales, gross margin dollars, or booked revenue, for example. Each plan is customizable, and includes an earnings calculator for illustrating payout mechanics.
Downloadable Plans
- Simple commission plan. This plan has a single commission rate, calculated based on target earnings and target performance expectations.
- Simple commission plan with performance threshold. This plan adds a threshold performance level to the bonus formula. Below threshold performance, no incentives are earned.
- Simple commission plan with performance threshold. and over-target accelerator. This plan adds an additional over-quota payout rate.
- Simple commission plan with performance threshold. over-target accelerator, and a regressive top-end rate. This plan adds an additional over-quota payout rate that decelerates earnings once the plan's upside incentives are achieved.
Quota-Based Incentive Compensation Plans
These quota-based plans have a single quota-based performance measure, and are designed for use with a base salary. These plan designs work well when performance objectives can be established with reasonable accuracy and consistency. Example performance measures used in quota-based plans are sales quota achievement, or booked revenue quota achievement. Each plan is customizable, and includes an earnings calculator for illustrating payout mechanics.
Downloadable Plans
- Simple quota plan. This plan uses a bonus formula for quota achievement, with an accelerated rate for over-quota performance.
- This plan adds a threshold performance level to the bonus formula. Below threshold performance, no incentives are earned.
- This plan includes a performance threshold and an additional over-quota accelerator payout rate.
- This plan includes a performance threshold, over-quota accelerator payout rate, and an additional over-quota payout rate that decelerates earnings once the plan’s upside incentives are achieved.
Plans with Profitability Multipliers
These plans include a profitability multiplier. They reward for both volume (e.g., sales revenue, units, gross margin dollars, etc.) and profitability (e.g., gross margin percentage, net profit percentage, percentage of target price realized, etc.). Plans may have one or two volume quota components, and one multiplier component tied to the profitability percentage of credited volume (sales). Managers can use these plans to encourage both volume attainment and profitable sales; they are especially useful for selling environments that are price-sensitive and where sellers have pricing discretion. These plans are intended for use with a base salary, but have adjustable weightings for establishing the right pay mix and performance emphasis.
Downloadable Plans
- Quota achievement with profitability percentage multiplier
- Commission with profitability percentage multiplier
Two Quota Plans
These plans include two quota achievement components. These components can provide separate payout rates independent of each other, or be linked in various ways to promote balanced performance across both objectives.
Downloadable Plans
- Two quota achievement components each using a bonus formula.
- Two quota achievement components; one bonus formula, one step bonus.
- Two quota achievement components each using a bonus formula. Components' payouts are linked.
- Two quota achievement components; one bonus formula, one step bonus. Components' payouts are linked.
