Go to Market Coffee Talks · 3 min
Key moments - from our scoring
Substance score
28 / 100
Five dimensions, 20 points each
Building a commission plan for your first salesperson requires balancing clarity, fairness, and business sustainability. This episode breaks down four critical dimensions: structuring pay by revenue type (new customer acquisition at the highest rate, upsells in the middle, renewals lowest), validating the math so commission generates at least a 5x return per dollar paid, keeping the plan simple enough to explain in two minutes and calculate in Excel, and deciding on cash timing (close, cash received, or split payment). The host emphasizes that commission plans function like incentive contracts - confusing or unfair structures breed disputes and kill motivation, while overly clever plans invite gaming. Founders and early-stage operators hiring their first sales team will find practical guidance on avoiding common pitfalls: overpaying for maintenance revenue, creating unsustainable long-term costs, adding too many accelerators or exceptions, and deferring payout decisions. The framework applies whether you're building ground-up or inheriting a broken plan.
Pay new customer acquisition the highest commission rate, upsells a moderate rate, and renewals the lowest rate. This reflects the effort required and prevents overpaying for lower-friction maintenance revenue.
Early-stage, a 5x return is a good benchmark - for every dollar spent on commission, the rep should bring in $5 in revenue. For example, $1 million in revenue generating $200,000 in commission.
If you can't explain it in 2 minutes, can't calculate it in Excel, or it's clever enough for someone to game it, it's too complex. Clarity beats clever every time.
Options include at deal close, upon cash received, or a split between the two. Many startups split payment (e.g., part at signature, part at cash collection) to protect the business while maintaining rep motivation.
Our reviewer’s read on each dimension, with quotes from the episode.
Covers four concrete commission-plan concepts in three minutes with a usable rule of thumb, but most points are standard advice any operator hiring a first rep would encounter quickly.
Early on, a 5x return is a good rule of thumb
If you can't explain the plan in 2 minutes, It's too complex
Recycles well-worn commission wisdom (pay new business more, keep it simple, time the payout) with no contrarian or first-principles reframing.
Winning new customers deserves the highest commission
Clarity beats clever every time
Solo monologue with no named guest or identified practitioner, and no evidence of who is speaking or their track record.
You just hired your first salesperson.
Offers one illustrative numeric example and a 5x ratio, but no named companies, real data, or case studies - largely hypothetical.
the rep is bringing in $1 million in revenue, it generates $200,000 in commission
part at signature, part when cash is collected
A scripted one-way monologue with no host questions, follow-ups, or pushback by format.
Here are 4 concepts to get right.
you may even enjoy the holidays without a commission argument under the tree
Computed from the transcript - who did the talking, and the words that came up most.
That first sales commission plan has more influence on growth than most leaders realize. Recent conversations with founders and scale-ups keep surfacing a similar issue. Plans look fine on paper but quietly drive the wrong behavior. Early commission plans shouldn’t be clever. They should be clear, fair and economically sound. In this 2 minute Espresso Shot, I break down four core concepts every business leader should understand before distributing that plan.
Transcribed and scored by The B2B Podcast Index.
You just hired your first salesperson. It's exciting, it's a little terrifying, and one of the fastest ways to set it right or very wrong is the commission plan you hand to them. Think of it like a holiday gift. If your commission plan is confusing, awkward, or comes with fine print, well, nobody's happy.
Your initial commission plan doesn't need to be clever. It needs to be clear and it needs to be fair and it needs to incent what you want for your business. Here are 4 concepts to get right. First, pay differently for different revenue.
Not all revenue takes the same effort, so it shouldn't pay the same. Winning new customers deserves the highest commission. It's the hardest and the most challenging work. Of course, upselling matters, but usually less than winning new customers.
Pay upsells less than on new customers. And renewals? The lowest commission of them all. This prevents you from overpaying for maintenance revenue, and it keeps incentives honest.
Second, make sure your math works. Do a simple gut check. For every dollar you pay in commission, how many dollars of revenue come back? Early on, a 5x return is a good rule of thumb.
For example, the rep is bringing in $1 million in revenue, it generates $200,000 in commission. Think clearly about this topic and follow the math. If you pay too little commission, you are asking for disappointment. On the flip side, the business can't afford the long-term plan, it will break no matter how motivating that plan sounds.
Third, keep it simple enough to trust. If you can't explain the plan in 2 minutes, It's too complex. If you can't calculate it in Excel, expect disputes. And if it's clever enough to game, somebody will game it.
Clarity beats clever every time. Avoid too many accelerators, too many exceptions, and especially the "we'll figure it out later." Fourth, cash timing matters. Decide when commissions are paid.
At close? On cash received, or somewhere in between. Many startups split it - part at signature, part when cash is collected. That protects the business without killing motivation.
Your first commission plan sets the tone for how selling works in your company. Get these 4 things right and you'll build trust, alignment, and you'll build momentum. Heck, you may even enjoy the holidays without a commission argument under the tree.
Other episodes covering the same guests and topics, from across The B2B Podcast Index.
What It Really Takes to Go from Services to SaaS72 / 100One Shift At A Time: Hockey Lessons For Go To Market with Matthew Rubin51 / 100
Espresso Shot: Ever Ask a Question and Nothing Happens?48 / 100
5 Pricing and Packaging Principles That Work As You Scale57 / 100
Selling When It Feels Awkward: Practical Tips for Founders
