Quota (sales quota) is a specific, measurable target assigned to a salesperson or sales team, to be achieved within a defined time period. Quotas serve as the benchmark for performance measurement and typically determine commission rates, bonuses, and overall compensation. According to Alexander Group (2024), 60-70% of reps should hit their quota to indicate proper quota setting.
Well-designed quotas serve several critical functions:
According to Pavilion (2024), teams with clearly defined quotas perform 23% better than those without.
| Type | Description | Example |
|---|---|---|
| Revenue quota | Total sales value | $250,000 per quarter |
| ARR/MRR quota | Recurring revenue target | $50,000 new ARR per month |
| Deal count | Closed deals | 15 new customers per month |
| Activity quota | Sales activities | 50 discovery calls per week |
| Combination quota | Multiple weighted metrics | 70% revenue, 30% new logos |
Start with company target, allocate to team:
Build from territory potential:
Based on past results plus growth:
Quotas directly impact compensation through tiered structures:
| Attainment | Commission Rate | Example ($250,000 quota) |
|---|---|---|
| 0-50% | 0% (threshold) | $0 |
| 50-100% | 8% | $125,000 × 8% = $10,000 |
| 100-150% | 12% (accelerated) | $125,000 × 12% = $15,000 |
| 150%+ | 16% (super) | Uncapped |
| Period | Application | Benefits |
|---|---|---|
| Annual | Enterprise sales | Allows for seasonality |
| Quarterly | Most B2B | Balance of measurement and flexibility |
| Monthly | Transactional sales | Frequent feedback |
Make quotas achievable: 60-70% of reps should hit quota.
Ensure fairness: Account for territory differences in market size and competition.
Communicate clearly: Reps should understand how quota is calculated.
Set realistic ramp periods: New reps need time to build pipeline.
Overly aggressive quotas demotivate the team and increase turnover. If less than 50% hit quota, it's probably too high.
Generally, quotas should be stable. Mid-period changes undermine trust and predictability.
Typically pro-rata based on work time. 50% time = 50% quota.
With Prowi, you can manage quotas across the organization, track attainment in real-time, and automatically calculate commissions based on quota performance.