A sales job offer that promises "uncapped earning potential" can mean almost anything. The real pay sits in the details: the base salary, the commission rate, the quota, the tiers, and the fine print about when you actually get paid. Here is how each piece works, with numbers.
The two building blocks: base and commission
Most sales pay plans combine a base salary with variable commission. The split between them is usually written as a ratio, like 70/30 or 50/50, describing how much of your target total pay (called on-target earnings, or OTE) comes from each part. A 70/30 plan with $100,000 OTE means a $70,000 base and $30,000 in commission if you hit quota exactly.
The ratio tells you how much risk you carry. A high base with a small commission share means steadier pay and less upside. A low base with a large commission share means a bad quarter hurts, but a great quarter pays far more. Neither is better in the abstract; it depends on how predictable the territory is and how much income volatility you can absorb.
Commission itself is usually a percentage of something: revenue, gross profit, or margin on the deals you close. Revenue-based commission is simple to calculate but can reward unprofitable deals. Profit-based commission aligns your pay with the company's bottom line, but the math is harder to verify from your side of the desk. Always ask which one your rate applies to.
Quota: the number everything hangs on
Quota is the sales target you are expected to hit in a period, usually a quarter or a year. Hitting 100 percent of quota typically earns 100 percent of your target commission. Hitting 80 percent earns roughly 80 percent, though some plans pay nothing below a threshold, called a gate or floor, often set around 50 to 70 percent of quota.
Quota quality matters more than quota size. A quota set from last year's results plus an arbitrary growth percentage, in a territory that just lost its biggest account, is a different job from the same number in a growing territory. Before accepting a role, ask what percentage of the team hit quota last year. If fewer than half did, the plan may be designed so most people earn below OTE.
Also ask whether quota is individual, team-based, or a mix. Team quotas spread risk but dilute your control: a strong personal month can still pay poorly if the team misses. Individual quotas are cleaner but unforgiving in a slow market.
Tiers: the rate climbs as you sell more
A tiered plan pays different rates at different levels of attainment. A common structure looks like this:
- 0 to 50 percent of quota: no commission, or a reduced rate
- 50 to 100 percent: the standard rate, say 10 percent of revenue
- 100 to 150 percent: an accelerated rate, say 15 percent
- Above 150 percent: a further accelerated rate, say 20 percent
Tiers exist to solve a real problem: a flat rate gives you the same reward for the easy first deals as for the hard last ones, so motivation fades late in the period. Tiers push you to keep selling after quota is already met, which is exactly when the company wants your effort most.
Accelerators: where big months get much bigger
Accelerators are multipliers applied once you pass quota. Instead of a higher tier rate, the plan might pay 1.25x your standard commission on everything above 100 percent, and 1.5x above 150 percent. The effect is dramatic. Suppose your standard commission on a $20,000 deal is $2,000 at a 10 percent rate. Above quota with a 1.5x accelerator, that same deal pays $3,000.
This is why two salespeople with the same quota and the same base rate can take home very different pay: the one who lands at 130 percent of quota in a plan with accelerators can out-earn a colleague at 100 percent by far more than 30 percent. If you are a consistent over-performer, accelerators are worth more than a slightly higher flat rate.
Worked example: one quarter, three outcomes
Consider a salesperson with a $60,000 base salary, $40,000 target commission at quota (a 60/40 split, $100,000 OTE), a quarterly quota of $250,000 in revenue, a 4 percent commission rate, and a 1.5x accelerator above 100 percent of quota. The quarterly base is $15,000 and the quarterly target commission is $10,000.
- At 80 percent of quota ($200,000 sold): commission is 4 percent of $200,000, or $8,000. Total quarterly pay is $23,000, below the $25,000 OTE pace.
- At 100 percent of quota ($250,000 sold): commission is 4 percent of $250,000, or $10,000. Total quarterly pay is $25,000, right on OTE pace.
- At 130 percent of quota ($325,000 sold): the first $250,000 pays $10,000, and the extra $75,000 pays at the accelerated 6 percent rate, adding $4,500. Total commission is $14,500 for the quarter, and total quarterly pay is $29,500 — above the OTE pace.
The jump from 100 to 130 percent of quota raised commission by 45 percent on only 30 percent more sales. That leverage is the whole point of accelerators, and it is also why companies cap them: some plans include a cap, a maximum total payout, that kicks in at very high attainment.
Draws: an advance, not a gift
Many roles, especially ones with long sales cycles, pay a draw: a monthly advance against future commissions. A $4,000 monthly draw means you receive $4,000 even in a month when you close nothing, and your earned commissions later offset the advances already paid.
The critical question is whether the draw is recoverable. With a recoverable draw, shortfalls carry forward: if you drew $12,000 over a slow quarter but earned only $8,000 in commission, you start the next quarter $4,000 in the hole. With a non-recoverable draw, the company absorbs the difference and you keep the advance. Non-recoverable draws are much friendlier, and much rarer. Read the wording carefully, because "draw" alone usually means recoverable.
Clawbacks, timing, and the fine print
Three more details decide what you actually keep. First, clawbacks: if a customer cancels, defaults, or returns the product within a set window, the company may reclaim the commission already paid to you. A 90-day clawback window is common in subscription businesses. Second, payment timing: some companies pay commission in the month of the sale, others a month or a quarter later, and some only after the customer pays the invoice. Third, termination rules: if you leave mid-quarter, do you keep commissions on deals you closed but that have not yet paid out? Some plans say yes, some say no, and the difference can be thousands of dollars.
None of this makes commission plans dishonest. They are simply contracts with moving parts, and the moving parts are where the money hides. Ask for the plan document, not just the offer letter, and run the worked example above with the actual numbers before you sign.
Which structure fits which seller
A high base with a modest flat rate suits steady, relationship-driven roles where deals are predictable and the risk of a dry month is low. A lower base with tiers and accelerators suits hunters in high-growth markets who can live with variance and want the upside. A draw, recoverable or not, suits roles with long cycles where income would otherwise arrive in lumps. There is no universally best plan, only a plan whose risk matches your situation and whose quota matches the territory.
Frequently asked questions
What is a typical commission rate in sales?
It depends on the industry and the product. Retail and inside sales roles often pay 2 to 10 percent of revenue, while software and business-to-business roles commonly pay 10 to 20 percent, sometimes more on profit rather than revenue. The rate only makes sense next to the base salary: a high rate with a low base can pay less overall than a modest rate with a strong base.
What is a draw against commission, and do I have to pay it back?
A draw is an advance the company pays you each month, which your future commissions then repay. With a recoverable draw, any shortfall carries forward and is deducted from later commissions until the advance is repaid. With a non-recoverable draw, the company absorbs the shortfall and you keep the advance even in a slow month.
Are accelerators worth more than a higher base rate?
For strong performers, yes. An accelerator raises your rate once you pass quota, so the deals that push you past 100 percent pay at 1.25x or 1.5x the standard rate. If you regularly exceed quota, accelerators can add more to your annual pay than a slightly higher flat rate would.
What should I check before accepting a commission-based job offer?
Check four things before you sign: whether the draw is recoverable, how quota is set and whether it is realistic, when commissions are actually paid out, and what happens to commissions when a customer cancels or a deal closes after you leave. Get the answers in writing, because the offer letter rarely tells the full story.