Commission glossary

Every commission term, explained plainly.

ACV, TCV, accelerators, clawbacks. Sales compensation has its own vocabulary. Search it here, with the numbers that make each term concrete.

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AcceleratorAn accelerator in commission increases the rate when sales targets are exceeded. Read how the accelerator motivates salespeople and drives growth.
Annual Contract Value (ACV) Annual Contract Value (ACV) shows the annual contract value per customer. Understand how ACV is used in commission, bonus and growth strategy.
Annual Recurring Revenue (ARR)Annual Recurring Revenue (ARR) is the yearly value of recurring subscription revenue. Learn how ARR is calculated and used in sales commissions.
At-Risk PayAt-risk pay is the portion of an employee's compensation that is only paid when specific goals are achieved. Learn how at-risk pay impacts motivation and pay structure.
AttainmentThe proportion of target fulfilment, for example how much of OTE has been achieved. See how attainment is used for commission.
Baseline It laid down the starting point for a bonus or commission structure.
Base SalaryBase salary is the fixed, guaranteed portion of an employee's compensation paid regardless of performance. Learn about the role of base salary in sales compensation.
BonusesAn additional payment in addition to fixed salary, typically dependent on performance.
CAC (Customer Acquisition Cost)CAC is the total cost of acquiring a new customer, including marketing, sales, and onboarding - a critical metric for SaaS companies.
Churn RateChurn rate measures what percentage of customers or revenue a company loses over a period. Learn how churn affects commission and sales targets.
ClawbackReimbursement of previously paid commission, typically by churn.
Close DateThe date a deal officially closes and can trigger commission.
CLV / LTV (Customer Lifetime Value)CLV is the total value a customer generates for a company over the entire customer relationship - a key metric for SaaS and subscription businesses.
CommissionThe share of the sale which is paid to the seller as a reward.
Commission DrawA commission draw is an advance against future commissions that ensures salespeople have a minimum income during low-sales periods or onboarding.
Commission PlanA commission plan can include several commission models for how commissions are calculated and paid.
Commission RateA commission rate is the percentage or fixed amount a salesperson receives as compensation for each sale. Learn how to set the optimal commission rate.
Commission StatementA summary of commissions earned in a given period for either one commission model or multiple models.
Commission StructureCommission structure defines how salespeople's commission is calculated. Learn about different models, components, and best practices for designing effective plans.
Compensation PlanA comprehensive summary describing salary, bonus and commission.
Conversion RateThe percentage of leads that turn into closed sales.
CorrectionPost-regulation to correct commission after actual data back in time.
Crediting RuleRules for who should be attributed commissions in complex deals.
Deal ValueThe economic value of a single sales order.
DeceleratorA decelerator lowers commission rates when reps perform below quota. Learn how decelerators are calculated, when they make sense, and see concrete examples of how they impact your sales team's earnings.
DrawA form of advance on commission that may have to be offset later.
Flat Rate CommissionA fixed percentage of sales as commission.
ForecastingEstimation of future revenues and thus expected commission.
Gross Margin CommissionGross margin commission calculates salesperson compensation based on profit margin rather than revenue. Learn how this model increases profitability and aligns incentives.
ICM (Incentive Compensation Management)ICM is the discipline and software category focused on designing, managing, and optimizing commission and incentive programs for sales organizations.
IncentiveA comprehensive guide to sales incentives: types, psychology, design principles, industry benchmarks, and best practices for driving performance.
Kicker An additional commission, triggered by particularly good results.
Lag TimeThe delay between the deal closing and the commission payout.
LeaderboardA ranking system that shows top sellers and performance.
Margin-Based CommissionCommissions based on profit rather than revenue, also sometimes called contribution margin.
Milestone BonusesBonus paid upon achievement of specific milestone.
MRR (Monthly Recurring Revenue)Used for commission in SaaS.
MultiplierA factor that adjusts commission based on performance.
Net New RevenueRevenue from new customers, often separately bonified.
NRR (Net Revenue Retention)NRR measures how much revenue you retain and expand from existing customers, including churn, downgrades, and expansion - a critical SaaS metric.
On-Target Earnings (OTE)Total salary expected at 100% target completion of a Commission Plan.
Override CommissionOverride commission is a compensation model where sales managers receive a percentage of their team's total sales. Learn about manager compensation and how overrides motivate leadership.
Pay MixPay mix is the ratio between base salary and variable compensation. Learn what 60/40, 50/50 and other models mean, see calculation examples, and find the optimal pay mix for your sales team.
PayoutThe actual payout to the seller.
Payout FrequencyHow often commissions are paid (monthly, quarterly).
Performance BonusPerformance bonus is a one-time payment to salespeople upon achieving specific goals. Learn about types, calculations, and best practices for bonus programs.
PipelineA list of deals that are either open or closed in a kanban overview.
QuotaThe goal a seller must achieve before commission is activated.
Quota AttainmentHow much of the quota has been reached?
Ramp PeriodStart-up period with special conditions for new employees.
Renewal CommissionRenewal commission is compensation paid for renewing existing customer contracts. Learn about renewal compensation models and how they impact customer retention.
Residual CommissionResidual commission is a compensation model where salespeople receive ongoing payments as long as their customers remain active. Learn about recurring commission structures and best practices.
Revenue Operations (RevOps)Revenue Operations (RevOps) is a strategic function that unifies sales, marketing, and customer success under one umbrella to optimize the entire customer journey and maximize revenue.
Sales CreditingSales crediting determines how commissions are assigned when multiple salespeople contribute to a deal. Learn about crediting models, rules, and best practices for fair attribution.
Sales Performance Management (SPM)Sales Performance Management (SPM) is a discipline encompassing all processes to manage and optimize sales team performance. Learn about components, benefits, and implementation.
Sales QuotaA sales quota is the sales target a salesperson is expected to achieve within a given period. Learn how quotas are set and used in commission calculations.
SandbaggingSandbagging is when salespeople deliberately delay deals or underreport pipeline to gain advantages in future periods.
SpiffA short-term bonus or reward, often paid out in cash or as gift cards, given to motivate sellers to sell a particular product or reach a quick goal. ‍
Split CommissionWhen several share the commission for the same deal.
Target A defined goal that triggers commission.
TCV - Total Contract ValueTCV (Total Contract Value) is the total value of a customer contract over its entire duration. Learn how TCV is used in commission calculation and sales measurement.
Total Target Compensation (TTC)Total Target Compensation (TTC) is the total annual compensation an employee can expect when achieving 100% of their goals, including base salary and variable pay.
True-Up (Commission Adjustment)True-up is a periodic adjustment of commission to ensure correct payment. Learn about true-up processes and how they're used in commission administration.
Upsell and Cross-sell Commission (Expansion Commission)Upsell and cross-sell commission rewards salespeople for growing revenue from existing customers. Learn about expansion revenue compensation and best practices.
Variable CompensationVariable compensation is the portion of an employee's pay tied to performance, sales results, or achieving specific goals. Learn how to structure and calculate variable pay effectively.
WinbackWinback is the strategy for re-engaging lost customers. Learn what winback means, why it's more cost-effective than acquiring new customers, and how to build an effective winback strategy with the right incentives.
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