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Multi-Year Deal Treatment
Special handling for contracts spanning multiple years - plan must define quota credit and commission treatment.
Specialty
Advanced
How it works
Multi-year deals require explicit plan rules: is quota credited on year-1 ACV or full TCV? Is commission paid up-front on full TCV, on year-1 ACV with renewal commissions in years 2 and 3, or some hybrid? Most modern plans pay year-1 ACV up-front plus a small TCV kicker (e.g., 1% of remaining TCV).
Formula
Commission = (rate x ACV) + (TCV_kicker x remaining_TCV)
Worked example
Example. A 3-year, $100K ACV / $300K TCV deal. AE earns 10% x $100K = $10K immediate plus 1% x $200K = $2K kicker. Years 2 & 3 generate renewal commission separately.
Pros & cons
Pros
- Rewards multi-year selling without windfall payouts
- Aligns commission with revenue recognition
- Clear customer-LTV alignment
Cons
- Complex to communicate
- Requires careful effective-dating logic
Best for
- SaaS with multi-year contracts
- Long-term enterprise deals
- High-LTV customer segments