Apply / Commission Structures / Tiered Variants

Tiered (Non-Cumulative / Marginal)

Higher rate applies only to the revenue inside each tier.

Tiered Variants Intermediate

How it works

The standard modern tier model: each band of attainment has its own rate, applied only to the revenue inside that band. Most ICM platforms default to this model because it's predictable and easy to model. Compared to cumulative tiers, non-cumulative tiers cost less and produce smoother accruals across the year.

Formula

Commission = Σ (band_revenue x band_rate)

Worked example

Example. Tiers: 0-80% at 6%, 80-100% at 10%, 100-125% at 15%, 125%+ at 20%. On a $1M quota with $1.1M booked, the rep earns 0.06x$800K + 0.10x$200K + 0.15x$100K = $48K + $20K + $15K = $83K.

Pros & cons

Pros

  • Smooth accruals - no surprise true-ups
  • Cheaper for finance than cumulative
  • Predictable monthly statement math

Cons

  • Less generous to top performers vs. cumulative
  • Reps may not see the benefit of crossing a tier as immediately

Best for

  • Mid-to-large SaaS teams
  • Plans with strong rep transparency goals
  • Finance teams wanting predictable accruals
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