Sales Commission Structure: Types, OTE and How to Design a Plan

A sales commission structure is the set of rules that turns sales results into pay: what you measure, how much each sale or each percent of quota is worth, and when it is paid. Most employed salespeople in Europe are on base salary plus commission, often expressed as on-target earnings (OTE): the total pay at 100% of quota.

This guide compares the seven main types of sales commission, gives typical pay mixes and OTE logic by sales role, and walks through quotas, accelerators, caps and clawbacks with a worked payout example. It also covers the European legal points most US-centric guides skip, from holiday pay to works councils and pay transparency, plus TalentUp data on how often 2026 sales job ads advertise commission.

What Is a Sales Commission Structure?

A commission is variable pay earned because a sale was made, usually calculated as a percentage of revenue, margin or bookings, or as a share of a target amount when quota is reached. A commission structure, or commission plan, sets out every rule needed to calculate it:

• Eligible roles and the metric (revenue, gross margin, new annual recurring revenue, units, renewals).
• Commission rate or target incentive, and the quota it is linked to.
• Tiers, accelerators, decelerators and caps that change the rate as performance rises.
• Crediting rules: when a deal counts (signature, invoice or payment) and how split deals are shared.
• Payment timing, clawbacks and what happens to leavers and joiners.

Commission is one form of variable pay. For bonuses, profit sharing and long-term incentives, see our pillar guide on variable compensation; this article focuses only on sales commissions.

7 Types of Sales Commission Compared

Most companies combine two or three of these mechanics, for example a base salary plus a tiered commission with a team kicker.

Two further variants are common inside these types: territory volume commission, paid on all sales in a territory, and multiplier plans, where a payout is multiplied by a factor for a strategic product or a second metric such as retention.

How to Calculate Each Type: Commission Rate Examples

These are illustrative calculations, not market rates. The right rate depends on your margins, deal size and pay mix.

Pay Mix and OTE by Sales Role

The pay mix is the split between base salary and target commission within OTE. A common design rule is that the more a role controls whether the deal closes, the more of its pay can be at risk. The ranges below are typical design starting points, not survey results: calibrate them with market data for your roles and countries.

How OTE works. An AE with a €90,000 OTE on a 60/40 mix has a €54,000 base and €36,000 target commission. If the annual quota is €900,000 in new bookings, the base commission rate is 4% (€36,000 ÷ €900,000).

Market data adds a reality check. In TalentUp’s 2026 sample of UK sales ads that state both a base and an OTE figure, the median base is about 65% of OTE (middle half: 55–75%), a roughly 65/35 mix, and the median OTE quoted is about £48,000. Those ads mix junior telesales, field sales and SaaS roles, so use them as a market signal, not a target for a specific role. To benchmark base and total cash by role and country, see how sales positions are paid across markets and TalentUp’s methodology.

How Often 2026 Sales Ads Mention Commission: TalentUp Data

Source: TalentUp job postings database, January–September 2026, about 22,400 sampled sales job ads in 11 countries.

Commission is less advertised than many people assume. In a random sample of about 22,400 employee job ads in sales with a full description, 11.5% mention commission or OTE and 4.1% promise uncapped commission or variable pay.

What stands out:

• The UK is the commission market. More than a quarter of UK sales ads mention commission, one in ten promises it uncapped, and 11.3% state an OTE figure. In Ireland, 4.8% state one; in the other nine countries, under 1% do.
• France talks about “variable”, not “commission”. Only 7.4% of French sales ads mention commission, but 6.9% promise an uncapped variable (variable déplafonné), the second-highest rate after the UK.
• Role matters more than country. Commission is mentioned in 25.9% of account executive ads and 22.7% of SDR/BDR ads, against 10.4% of sales manager, 10.2% of account manager and 9.4% of retail sales ads.
• OTE is still an Anglo-Saxon convention. Even AE and SDR ads use the term OTE in only about 8–9% of cases across the 11 countries.

The practical lesson: if your sales role has a meaningful commission, put the OTE and the base in the ad. Candidates compare total cash, and where pay transparency laws apply they will ask anyway (see how to post a job offer under the EU Pay Transparency Directive).

How to Design a Commission Plan: Quotas, Accelerators and Caps

1. Start from the sales strategy. Decide what the plan must drive this year: new logos, expansion, margin, a new product. One primary metric per role, two at most.
2. Set OTE and pay mix by role and level, benchmarked against market total cash, not only base.
3. Set quotas from capacity and pipeline data, not just last year plus a growth rate. A plan where most reps miss quota stops motivating and becomes a hidden pay cut.
4. Derive the commission rate: target commission ÷ quota.
5. Add accelerators above 100% so over-performance pays more per euro, and consider decelerators or a cap above a very high level to limit windfall deals.
6. Write the crediting, timing and clawback rules, including leavers, joiners, territory changes and split deals.
7. Model the cost under weak, normal and strong years before launch.

Worked Payout Example

An AE has a €90,000 OTE (60/40): €54,000 base, €36,000 target commission and a €900,000 annual quota. The plan pays:

Some plans add a threshold (for example, no commission below 50% of quota) or a hard cap (for example, 200% of target commission). Caps cut cost risk but can make top performers hold deals back, which is why many companies prefer a decelerator. For the behavioural side of these choices, see the psychology behind bonus structures.

Patrick Trümpi, a Swiss Chief Revenue Officer who has built sales teams at several European B2B start-ups, argues for dropping both thresholds and caps and keeping only accelerators:

Clawbacks and Payment Timing

Payment timing shapes behaviour: monthly or quarterly commission keeps line of sight short, while annual payouts favour retention but weaken motivation (see whether annual payouts still work). Decide clearly whether a deal is credited at signature, invoice or customer payment.

National law often sets the default:

• Spain: the right to commission arises when the deal is concluded and paid, and unless agreed otherwise it is settled and paid at the end of the year; the employee and their representatives can ask to see the relevant parts of the books (Workers’ Statute, art. 29.2).
• Germany: for employees paid commission, the commercial agent rules apply (HGB §65). The employer must issue a commission statement monthly, extendable to at most three months, by the end of the following month, and the employee can request an extract of the books (HGB §87c). The right to commission lapses if it is clear the customer will not pay, and amounts already received must be returned (HGB §87a).

Clawbacks reverse commission when a customer cancels, does not pay or churns within a set period. Keep them narrow, time-limited and written in advance. In the UK, for example, an employer may only deduct from wages if a statute, a written contract term or the worker’s prior written consent allows it (Employment Rights Act 1996, s.13). Offsetting against future commission is usually safer than asking for money back.

Some revenue leaders go further and pay part of the commission only after the customer succeeds, instead of clawing it back after churn. Matt Green, co-founder and CRO of the sales leadership community Sales Assembly, describes a plan that pays 8% of ARR at signature plus go-live, outcome and expansion bonuses:

Draws and guarantees help new hires ramp up. A non-recoverable draw is a guaranteed minimum; a recoverable draw is an advance offset against later commission, so cap the carry-forward and write off any remaining balance when someone leaves where local law requires it. Many companies use a guaranteed commission for the first one to three months instead, as several 2026 ads in our sample do. For one-off hiring payments, see sign-on bonuses.

European Legal Points for Commission Plans

US-focused guides rarely cover these, but they decide whether a plan is enforceable in Europe. Always confirm the details with local counsel.

The holiday pay point is often missed. In the Lock case, a sales consultant earning a basic salary plus monthly commission lost income in the months after his leave because he made no sales while away. The Court held that this deferred loss could deter workers from taking leave, so commission must count in holiday pay; national courts decide the reference period used to average it. For leave entitlements by country, see vacation days in Europe.

Commission Plans and the EU Pay Transparency Directive

The EU Pay Transparency Directive (2023/970) defines pay as base salary plus any complementary or variable components, so commission is pay. The transposition deadline was 7 June 2026, and obligations apply through national laws once each member state has transposed them.

For commission plans this means:

• Objective, gender-neutral criteria. Quotas, territories, account allocation and accelerators must rest on documented criteria that employees can request.
• Variable pay gap reporting. Employers report the gender gap in variable pay and the share of women and men receiving it: 250+ workers yearly and 150–249 every three years from 7 June 2027, 100–149 every three years from 7 June 2031.
• Joint pay assessment if an unexplained gap of 5% or more in a category of workers is not remedied within six months.
• Burden of proof on the employer in pay discrimination claims, so discretionary territory or account decisions need a paper trail.

Commission is a classic hiding place for gaps: better territories assigned informally, quotas not pro-rated for parental leave or part-time work, or unequal access to commission-eligible roles. Include commission in your pay equity audit and see our pay transparency resources.

Common Commission Plan Mistakes

• Too many metrics. Five weighted goals make the plan impossible to explain. Keep one primary metric and at most one modifier.
• Unreachable quotas. If most reps miss target year after year, the OTE is fiction and turnover follows.
• Paying on revenue when margin matters. Reps will discount to close; switch to gross margin or add a discount modifier.
• Changing the plan mid-period without notice or agreement, which damages trust and, in some countries, is not allowed unilaterally.
• No crediting or clawback rules for split deals, cancellations, leavers and territory changes.
• A below-market base compensated by “uncapped” commission few people earn.
• Ignoring holiday pay and leave when calculating commission-related pay.
• Benchmarking base only. Compare OTE and total cash by role and country, for example with TalentUp’s European Salary Benchmark Report and plans.

Sources

• TalentUp. Job postings database, January–September 2026: random sample of about 22,400 sales job ads in 11 countries (see methodology above).
• Court of Justice of the European Union. Press release No 76/14, Judgment in Case C-539/12 Lock v British Gas Trading Limited, 22 May 2014.
• European Union. Directive (EU) 2019/1152 on transparent and predictable working conditions, art. 4 and 5. EUR-Lex.
• European Union. Directive (EU) 2023/970 on pay transparency. EUR-Lex.
• Spain. Real Decreto Legislativo 2/2015, Estatuto de los Trabajadores, art. 29.2. BOE.
• Germany. Handelsgesetzbuch §65, §87a and §87c. Gesetze im Internet.
• Germany. Betriebsverfassungsgesetz §87. Gesetze im Internet.
• United Kingdom. Employment Rights Act 1996, section 13. legislation.gov.uk.