Design commissions that drive sales without compromising margin

Methodology and author

Define context, complete inputs, produce, review and adapt. Designed and signed by Julio Alonzo. Designed and signed by Julio Alonzo.

Requirements and limitations

Annual planning model for five salespeople and three concurrent plans. Original inputs are retained. New fields are fictional assumptions: initial invoiced revenue equals bookings, cancellations and bonuses start at zero, benchmark margin is 50%, and monthly allocation is uniform. Replace these assumptions with your data. All amounts must use the same currency and financial year. Each salesperson selects plan 1–3. The plan basis is 1 bookings, 2 invoicing or 3 collections. Quota and attainment always use annual bookings. The entered rate determines commission; target variable pay determines OTE and the fixed-variable mix. The gap against target is displayed rather than automatically corrected. The effective rate applies to the entire eligible base. Below 70% attainment the decelerator applies; above 110%, the accelerator. Exactly 70% and 110% use the standard rate. These are all-volume cliffs, not marginal bands. A small change near a boundary can materially change commission. Bonuses: qualifying new customer count times the unit bonus; eligible sales times the margin bonus rate when margin reaches its threshold; eligible strategic sales times the strategic rate. New customers means qualifying paid acquisitions under your policy. Strategic sales use the plan’s chosen basis. Bonuses start at zero and require your own definitions and approval. The cap limits commission plus bonuses before cancellation recovery; a zero cap eliminates all variable pay. Recovery = the lesser of capped variable pay and cancelled eligible sales × effective rate × recovery fraction. Salary and bonuses are not separately recovered. Cancellations are not deducted from the base again. Enter cancelled amounts on the same eligible basis, between zero and that base. Total compensation = annual salary plus net variable pay. Gross margin amount is invoiced revenue × entered gross margin; ratios use invoiced revenue and gross margin amount, respectively. A zero denominator displays n.a. Employer charges, taxes, third-party fees and other expenses are excluded. This is not a payroll, tax or employment-compliance calculation. The comparison evaluates each plan at 100% and 120% of its quota with equal bookings, invoicing and collections, a common benchmark margin, and no cancellations or new-customer or strategic-product bonuses. The margin bonus still applies when enabled. All six records use the same calculation as salespeople; they are not alternative company forecasts. The twelve months allocate net annual variable pay using editable weights that must total 100% for each salesperson. Salary is divided into twelve equal parts. Monthly tiers are not recalculated and transactions, invoices and payment dates are not tracked. This is an annual budget allocation, not a transaction ledger or cash forecast. Edit yellow cells only. Numbers, limits, plans, unique names and reconciliations are checked; REVIEW blocks results affected by invalid inputs. The target-variable gap is informational. Checks do not feed the model. Also review assumptions, documentation and formulas after customization. The retained policy DOCX is an editable framework of topics and approvals. Define eligibility, caps, cancellations, periods, dispute resolution and authorizations in writing with qualified professionals before employment use. The August 2026 PASS belongs to the historical document; this edition’s verification is documented separately. The Microsoft Excel interface has not been tested. The native Microsoft Excel interface was not tested.

Cutoff date: 2026-10-12