IT companies sell software licences, implementation projects and recurring managed services in the same deal. Each has a different margin and a different risk, so each usually carries its own rate. The plan has to keep them apart without becoming unreadable.
Split the deal into revenue types on the CRM deal, and pay each at its own rate: licence on order value, projects on margin or booked hours, managed service on monthly recurring value.
Licence 3–6% of order value; project 5–10% of contribution margin; managed service 10–15% of first-year MRR.
Team leads and business-unit managers on a percentage of the team's total, read from the team roster.
Licence at signature, project on invoicing milestones, managed service on go-live.
Decide explicitly whether a pure services deal pays and at what rate; the most common gap in IT plans.
6 business units, 6 plans, 100+ reps
Microsoft Dynamics 365 opportunities
Rep confirms, unit manager approves, finance exports
One payroll run for the whole group
The IT industry is one of the most commission-driven sectors. With US IT spending exceeding $1.5 trillion annually and hundreds of thousands of salespeople, account managers, and solution sellers, variable compensation is the foundation for industry growth. From hardware distribution to cloud services, commission models vary significantly.
This page explains how commission structures work in IT, which roles earn commission, and how effective commission administration can handle the industry's complexity.
IT companies use different commission models depending on product type:
| License Type | Typical Commission |
|---|---|
| Perpetual licenses | 5-15% of license value |
| SaaS/Subscription (new) | 8-15% of first-year ARR |
| SaaS renewal | 2-5% of ARR |
| Expansion/upsell | 5-10% of increased ARR |
Hardware sales typically yield lower percentage commission at 2-8% of sale price, but can produce high absolute amounts on large deals. Margin-based commission at 15-30% of gross profit is also common.
Commission on implementation projects and managed services. Typically 3-8% of project value for new projects and 1-3% of ongoing contracts.
Account Executives (AE): Primary sales role with OTE of $100,000-200,000. Enterprise AEs can reach $250,000-400,000. Typical 50/50 split between base and variable.
Sales Development Reps (SDR): Focus on lead generation and qualification. OTE of $60,000-80,000 with 30-40% variable. Commission per qualified meeting ($50-100) or pipeline generated.
Channel Managers: Work with partners and resellers. OTE of $90,000-150,000. Commission based on partner sales, typically 1-3% of partner revenue.
Customer Success Managers: Increasingly incentivized on expansion and renewal. OTE of $75,000-120,000 with 15-30% variable based on net revenue retention.
Solutions Engineers/Pre-sales: Technical sellers supporting the sales process. Often receive 15-30% of AE's commission on deals they participate in.
The IT industry has several unique elements:
Quarterly bonuses: Many IT companies operate with quarterly targets and bonuses beyond ongoing commission.
SPIFs: Time-limited incentives for priority products or target segments. Example: Double commission on security solutions in Q4.
President's Club: Exclusive recognition and trips for top 5-10% performers. Criteria typically 120%+ quota attainment.
OTE varies significantly. SMB sellers: $70,000-100,000. Mid-market: $100,000-150,000. Enterprise: $150,000-400,000. Highest compensation is in SaaS and cloud.
Typically monthly with a one-month delay. Some companies pay at booking, others at invoicing or collection.
Practices vary. Some give full commission to AE, others to CSM, and some split. Renewal commission is typically 2-5% of ARR vs. 8-15% on new business.
Yes, most SaaS companies have clawbacks. Typically 100% is returned for churn within 3 months, 50% within 6 months, and gradually less thereafter.