They help organizations translate revenue goals into measurable targets for individual reps and teams. Quotas also influence sales forecasting, compensation, hiring decisions, and day-to-day sales activity.

When quotas are aligned with market opportunity and team capacity, they create accountability and focus. When they aren’t, they can lead to missed targets, inaccurate forecasts, and frustrated sales teams.

In this guide, we’ll cover what sales quotas are, the different types of quotas, common challenges in setting quotas, and best practices for building realistic sales targets.

Need a sales team that can consistently hit quota and support revenue growth?

Learn how Peak Sales Recruiting helps companies identify, attract, and hire top-performing sales talent built for long-term success.

What Is a Sales Quota?

A sales quota is a performance target assigned to a rep, team, or region over a set period of time.

Most quotas are tied to measurable actions like:

• Revenue or bookings
• Closed deals
• Pipeline creation
• Sales activity in earlier-stage roles

At a basic level, quotas translate company revenue goals into individual expectations.

But in practice, they define what “good performance” looks like inside a sales organization.

Sales Quota vs Sales Goals

This distinction matters more than most teams treat it.

A sales goal is what the business is trying to achieve overall. That could include revenue growth, market expansion, or improving market share.

A sales quota breaks that goal into measurable output at the individual or team level.

For example, if a company targets 25% revenue growth, an account executive might be assigned a quarterly quota of $300,000 in bookings.

The relationship is simple:

• Goals define direction
• Quotas define contribution

When the two are aligned, teams understand priorities and expectations more clearly.

Why Are Sales Quotas Important?

A sales quota is a performance target assigned to a rep, team, or region over a set period of time.

Sales quotas impact:

• Pipeline coverage (commonly 3x-5x quota in B2B sales)
• Win rates by segment and territory
• Sales velocity and deal progression
• Discounting and deal structure
• Forecast categories like commit, best case, and pipeline

Quotas also need to reflect how sales teams actually spend their time. According to Salesforce, sales reps spend just 28% of their week actively selling, with the remainder dedicated to tasks like deal management, forecasting, internal meetings, and administrative work.

This is one reason quota setting can be challenging. Revenue targets need to support company growth, but they also need to account for the realities of the sales process. When quotas are set without considering factors such as selling time, sales cycle length, territory potential, and ramp time, attainment becomes much harder.

Common Challenges with Setting Sales Quotas

Most quota challenges stem from how targets are set among leadership, finance, and RevOps. 

There are two main approaches:

Top-down sales quotas

Leadership sets a revenue target and distributes it across teams or reps.

For example, a $20M ARR target gets split into $2M quotas for 10 enterprise reps.

On paper, it looks clean. In reality, performance spreads quickly because of differences in:

• Pipeline coverage (some reps at 2x, others at 5x)
• Win rates by territory or segment
• Deal size variation
• Market maturity and inbound flow

Even with identical quotas, attainment often looks very different underneath.

Bottom-up sales quotas

Quotas are built from historical performance and rep-level output. 

That usually includes:

• Average ARR or ACV per rep
• Win rates by segment
• Pipeline conversion rates
• Sales velocity
• Ramp time assumptions for new hires

For example, a rep consistently closing $1.2M annually might be set at $1.3M or $1.4M based on stable performance patterns.

This approach reflects real performance capacity but can unintentionally limit growth if historical output becomes the ceiling instead of the baseline.

5 Types of Sales Quotas (With Examples)

Different roles require different quota structures. Many organizations use a combination, depending on how their sales team is structured. 

1. Revenue Quota

A revenue quota is based on total sales dollars generated. 

Example: An account executive is responsible for $300,000 in closed revenue per quarter. 

This is the most common quota type because it ties directly to business growth. 

2. Volume Quota

A volume quota is based on the number of deals or units sold. 

Example: A rep is expected to close 15 new clients per month. 

This approach works well in transactional sales environments where deal size is relatively consistent. 

3. Activity Quota

An activity quota focuses on the actions that create pipeline. 

Examples include:

• Calls made
• Emails sent
• Meetings booked
• Demos completed

Activity quotas are common for SDR and BDR roles where pipeline generation is the primary responsibility. 

The challenge is that activity alone doesn’t guarantee results. Strong sales organizations use activity metrics as leading indicators rather than the ultimate measure of success. 

4. Profit Quota

A profit quota measures profitability rather than total revenue. 

Example: A rep is responsible for generating $100,000 in gross profit per quarter. 

This approach helps protect margins and discourages discounting. 

5. Customer Retention Quota

A retention quota focuses on maintaining and growing existing customer relationships. 

Examples include: 

• Renewal rates
• Expansion revenue 
• Upsells
• Cross-sells

For subscription-based businesses, retention can be just as important as acquiring new customers. 

How to Set Sales Quotas

Strong quotas are built from data, not assumptions. 

Start with Revenue Goals

Quota planning should begin with company revenue targets. 

But assigning quotas isn’t as simple as dividing a number across the team. Sales leaders also need to evaluate market opportunity, territory potential, and team capacity. 

Analyze Historical Performance

Past performance provides valuable context for future targets.

Review: 

• Quota attainment rates
• Win rates
• Average deal size
• Sales cycle length
• Onboarding and time for new hires

Ignoring historical data is one of the fastest ways to create unrealistic quotas/ 

Account for Ramp Time

New hires need to learn the business, build pipeline, and become productive. 

Quota expectations should reflect realistic ramp periods rather than assuming immediate performance. 

Align Quotas and Compensation

Quota and compensation plans need to reinforce each other.

When OTE, commission structure, and quota expectations are misaligned, it shows up quickly in rep behavior and retention.

Best Practices for Setting Sales Quotas

Don’t set up every rep to 100% attainment: 

If every rep is expected to hit quota, the target is probably too low. If almost nobody is hitting quota, it’s probably too high. 

Strong sales organizations use quota attainment trends to gauge whether expectations are realistic. 

Reassess quotas after territory changes:
Territory realignments, account reassignments, and market shifts can impact a rep’s ability to hit quota. 

Quota expectations should reflect those changes. 

Look for patterns, not exceptions:
One rep missing quota may be a performance issue. 

Several reps missing quota may point to a broader challenge involving lead quality, territory design, onboarding, or sales process execution. 

Don’t treat quotas as a Set-It-and-Forget-It exercise: 

Quota setting shouldn’t end after annual planning.

Review attainment rates, pipeline coverage, win rates, and sales cycle trends throughout the year to identify whether quotas remain realistic and achievable.

Final Thoughts

Sales quotas are one of the most important systems in a revenue organization. 

They influence how sales teams prioritize their time, how performance is measured, and how leaders forecast growth. When quotas reflect real selling conditions, they create clarity, accountability, and a stronger foundation for long-term success. 

But even the best quota structure depends on having the right people in the right roles. 

If you’re evaluating your sales team, reviewing performance, or planning your next sales hire, speak with our team about building a stronger sales organization.

Ready to strengthen your sales team? 

In this guide, we’ll break down the most common comp plans, when to use them, and what to watch out for so you can build a solid sales compensation plan aligned with your high-performing sales team.

Ready to build a sales force that fits your compensation model and drives consistent results? Contact Peak Sales Recruiting to hire the right sales talent.

What is a Sales Compensation Plan?

A sales compensation plan is a structured system that defines how a salesperson is paid. It includes base salary, variable earnings (like commission or bonuses), and sales rep or sales team performance metrics.

These plans exist to:

• Reward performance
• Drive desired behaviors
• Align reps with revenue goals
• Offer transparency and fairness

Poorly designed plans can lead to misaligned priorities, lack of sales team motivation, and unnecessary turnover. A well-structured plan answers three questions upfront: How much can I earn? What do I have to do to earn it? When will I get paid?

7 Sales Compensation Plan Examples

1. Salary Only

What it is: A fixed compensation model with no variable pay. Reps earn the same salary regardless of individual sales performance.

Best for: Entry-level sales support roles, internal sales development reps (SDRs), or sales in tightly regulated sectors where incentive pay is restricted.

Why it works: This model offers predictability and stability, making it easier for finance to budget and for reps to focus on non-revenue tasks like research or qualification. However, it lacks performance incentives, which can limit drive and output, especially in fast-paced B2B sales environments. This plan may also struggle to attract top talent accustomed to commission upside.

2. Commission Only

What it is: Sometimes referred to as a set rate commission plan, sales reps are paid exclusively based on closed deals, with no base salary.

Best for: Independent contractors, affiliate sales, or high-margin transactional environments where reps are already experienced and self-sufficient.

Why it works: With zero fixed cost to the business, this plan naturally attracts entrepreneurial reps who thrive under pressure. It encourages hustle, especially in short sales cycles. But for complex B2B sales with long deal timelines, it can cause high turnover and discourage reps who need income stability during ramp-up.

3. Base Salary plus Commission (Most Common)

What it is: A blend of fixed income and variable pay. Reps receive a guaranteed salary plus a commission on deals they close.

Best for: Most modern B2B sales teams, especially those with medium-to-long sales cycles or onboarding periods.

Why it works: This structure balances risk and reward. It appeals to a broader range of candidates while still driving sales quota attainment. Reps feel secure enough to invest time in larger deals, while still being motivated by a performance-based commission structure. The key is weighting, too much base can kill urgency, while too little may reduce retention.

4. Tiered Commission

What it is: Often referred to as a relative commission plan, this structure increases a rep’s commission rate as they hit predefined revenue or quota milestones. For example, 5% up to $50K, 7% up to $100K, and 10% beyond that.

Best for: High-growth sales environments looking to push reps past 100% of quota and drive consistent end-of-quarter or year-end momentum.

Why it works: Tiered commissions reward overperformance and create strong incentive for reps to keep selling after they’ve hit their base targets. It’s a proven way to backload revenue and encourage sustained effort. While this plan can get more complex to track and explain, especially without a CRM or comp tool, the upside is increased competitiveness and higher average deal size. It works best when quotas are realistic and tiers are clearly communicated.

5. Profit-Based Plans

What it is: Instead of rewarding reps solely on top-line revenue, this model ties incentives to the profit generated from each sale, taking into account margins, discounts, or delivery costs.

Best for: Companies focused on sustainable growth, margin protection, or consultative selling in complex B2B environments.

Why it works: Profit-based plans discourage deep discounting and prioritize value over volume. Reps are motivated to close deals that benefit both the customer and the company’s bottom line, aligning sales with financial goals. These plans can also encourage more collaboration with finance or operations teams. The downside is that reps may find it harder to influence or fully understand profit calculations, so transparency and education are key.

6. Territory Volume Commission Plan

What it is: Instead of commission tied to individual sales, reps are compensated based on the total sales volume in a defined territory, often shared among a team.

Best for: Companies with regional account structures, long-term client relationships, or team-based selling environments.

Why it works: A territory volume incentive plan fosters collaboration, encourages internal referrals, and rewards consistent, repeat business over time. It’s a strong fit for account management roles or outside sales teams where territory coverage and client retention matter more than short-term wins. However, individual accountability can become diluted if roles and rules aren’t well defined. Success with this model depends on having clear territory boundaries, role clarity, and trust among team members.

7. Draw Against Commission

What it is: A draw is an advance on future commissions. Reps receive guaranteed income upfront, either as a recoverable or non-recoverable draw, which is later deducted from the commissions they earn. This structure provides short-term stability while maintaining a performance-based compensation model.

Best for:
Early-stage reps in ramp-up periods, roles with long sales cycles, or companies entering new markets where deals may take time to close.

Why it works: Draws offer reps income predictability while they build pipeline and adjust to a new role. For employers, it balances financial risk with performance expectations. A recoverable draw must be paid back from future commissions, while a non-recoverable draw is essentially a guaranteed minimum that isn’t clawed back. This model is particularly effective when onboarding new hires or launching a new product, providing a financial runway without giving up commission-based motivation. However, it requires careful planning to avoid confusion and ensure reps understand how repayment works.

Why Sales Compensation Plans Drive Performance

Having a competitive compensation package in place will determine the behavior of your reps. A compensation package is one of the most powerful tools a sales leader has to influence performance, accountability, and team culture. A well-structured plan helps attract top-performing talent, reduce turnover, and encourage reps to focus on the activities that move the needle. When sales team members clearly understand what’s expected and how they’ll be rewarded, they’re more likely to stay engaged, motivated, and aligned with your revenue goals.

But the impact of compensation goes beyond individual motivation. It sets the tone for how your entire sales team operates. The right plan minimizes friction over accounts or territory, supports healthy competition, and reinforces your broader sales strategy. On the flip side, a misaligned or confusing plan can create frustration, stall momentum, and even push strong performers out the door. That’s why investing the time upfront to design a clear compensation plan that fits your sales cycle and team structure is essential.

Hiring the Right Reps for Your Compensation Model

At Peak Sales Recruiting, we often see misalignment between a company’s compensation plan and the type of salespeople they want to hire.

Here’s how to avoid that:

• Hiring for commission-only? Look for risk-tolerant, entrepreneurial reps who have a history of thriving in unstructured environments.
• Offering base + commission? Prioritize coachability, consistency, and willingness to work within a defined sales process.
• Using tiered comp? Target highly competitive reps who’ve outperformed quotas in the past.
• Using profit-based or territory plans? Find reps who understand margin impact or enjoy collaborative environments.

Tip: If you have a longer sales cycle, commission-only compensation will likely hurt your recruiting efforts. Top B2B reps often won’t risk going unpaid for months. In these cases, a base + commission model is the safest bet. 

The Bottom Line

Sales compensation plans influence how reps sell, how teams work together, and how revenue grows. The structure you choose can help or hurt your business depending on how well it fits your sales cycle length, the reps you’re hiring, and your overall business strategy. A well-structured sales compensation plan should fit your business model, align with your sales strategy, and make sense to the reps executing it.

A plan that is clear, fair, and easy to track will always outperform one that is confusing or misaligned with business goals. It should support how your buyers purchase and how your team works best.

Need help hiring the right sales reps to match your compensation model?
At Peak Sales Recruiting, we specialize in finding top performers who align with your structure and strategy. Contact us today to start building your high-performing team.

This guide will cover the basics of sales compensation plans, their purpose, how to create one, the types available, and best practices to ensure your plan drives results.

What is a Sales Compensation Plan?

A sales compensation plan is a structured framework outlining how your sales team members are rewarded for their efforts. It typically includes details on salary, commissions, bonuses, and other incentives tied to sales performance. The purpose of a sales compensation plan is to align your sales team’s efforts with your business objectives, ensuring they are motivated to meet and exceed their targets.

These plans often incorporate variable compensation components such as Sales Performance Incentive Funds (SPIFs), which reward salespeople for achieving specific outcomes during a sales period, such as selling new products or hitting strategic accounts.

What Are They Used For?

Sales compensation plans serve several critical purposes:

1. Motivating Sales Teams: Incentives inspire salespeople to exhibit positive behaviors, such as closing deals and generating qualified leads.
2. Aligning with Business Goals: Compensation plans tie sales performance to broader organizational objectives, ensuring alignment between individual and company success.
3. Attracting Top Talent: A well-designed plan helps attract and retain high-performing sales professionals while reducing high turnover rates.
4. Driving Revenue Growth: Structured incentives encourage sales teams to focus on high-impact activities like closing deals and increasing sales volume.
5. Promoting Repeat Business: Plans that emphasize customer lifetime value ensure sales teams prioritize long-term client relationships.

How to Create a Sales (Force) Compensation Plan

Creating a sales compensation plan requires strategic thinking and alignment with your company’s goals. Here are the steps to follow:

1. Define Your Goals: Identify what you want to achieve with the plan. Is it revenue growth, market share expansion, lower turnover, or increasing customer retention?
2. Understand Your Sales Roles: Different roles require tailored plans. For instance, account managers might need retention-based incentives, while new business reps might need higher commissions for new client acquisitions. Understanding tasks, including non-selling tasks, is critical.
3. Choose the Right Metrics: Decide how you will measure success. Common metrics include revenue, profit margins, customer acquisition, and average deal size.
4. Determine the Pay Mix: Decide on the ratio of base salary to variable pay. For example, a 60:40 mix might work for roles that require stability, while a 50:50 mix could be better for high-risk, high-reward roles. Fixed income components should balance risk and reward effectively.
5. Set Performance Targets: Define clear, achievable targets that align with your business objectives. This may include sales quotas for specific territories, significant changes in sales volume, or new products sold.
6. Incorporate Flexibility: Factor in industry benchmarks and accommodate complex sales cycles or long sales cycles to set realistic expectations.
7. Communicate and Train: Ensure your team understands the plan, its goals, and how they can maximize their earnings. Use payroll software to streamline calculations and reduce errors.

Types of Sales Compensation Plans

Here are some common types of sales compensation plans:

1. Straight Salary: Fixed salary with no variable incentives. Suitable for roles focused on customer service, non-selling tasks, or account management.
2. Commission-Only: Reps earn income based entirely on sales. Ideal for high-performance, independent sales roles. However, it may result in a high turnover rate if not balanced correctly.
3. Base Salary Plus Commission: Combines stability with performance-based incentives. Popular for most sales teams and aligns with average deal size expectations.
4. Draw Against Commission: Provides a guaranteed income with future commissions used to repay the draw. It helps new hires ease into the role.
5. Tiered Commission Structure: Reps earn higher commission percentages as they achieve sales accelerators, encouraging them to exceed quotas during highly successful months.
6. Profit-Based Plans: Incentives are tied to the profit margins of sales, encouraging a focus on high-value deals rather than just sales volume.
7. Territory Volume Commission Plan: Focuses on team efforts within a specific region or market segment, promoting collaboration and repeat business.

Best Practices for a Sales Force Compensation Plan

1. Align with Business Goals: Ensure the plan supports your strategic objectives and fosters a common goal across teams.
2. Keep It Simple: Complex plans can confuse and demotivate your team. Clarity is key to achieving positive outcomes.
3. Regularly Review and Adjust: Evaluate performance and adjust the plan to meet changing market conditions and business needs. Significant changes may be necessary to stay competitive.
4. Use Clear Metrics: Set clear and measurable performance standards, including metrics like closed deals, repeat business, and customer lifetime value.
5. Ensure Fairness: Avoid favoritism and ensure equitable opportunities for all team members. A fair system reduces turnover rates and promotes employee satisfaction.
6. Incorporate Sales Decelerators: Balance the rewards with measures that discourage unprofitable or low-quality sales.
7. Budget Effectively: Consider the overall budget and ensure the plan is financially viable, even in a tight budget scenario.

Conclusion

An effective sales (force) compensation plan is a powerful tool for motivating your team and driving business growth. By carefully designing a plan that aligns with your goals and the needs of your sales team, you can create a win-win scenario where your company and its employees thrive. Whether focusing on strategic accounts, promoting positive behaviors, or leveraging tools like SPIFs and tiered commission structures, a well-executed plan is integral to achieving success.

Implement these best practices and adjust for your company size, business strategy, and financial constraints. A well-crafted plan will ensure your top performers, as well as new hires, stay motivated while driving revenue and promoting a culture of excellence.

For more sales content, check out The Peak Blog.

What is Sales OTE (On-Target Earning)?

Sales OTE represents the total compensation a salesperson can expect to earn in a year, assuming they achieve their sales quota. It’s a combination of two key elements:

• Salesperson’s Base Salary: A fixed amount paid regularly, offering financial security.
• Commission: Variable income earned by exceeding sales goals.

Think of OTE as a target — if you hit the bullseye (a rep’s annual quota), you take home the total amount.

OTE Formula

One of the simplest ways to understand OTE is through a basic formula: base salary plus commission. This calculation reflects the total earnings a salesperson can expect if they meet their sales targets. While the exact numbers vary by role and industry, this structure helps set clear expectations and align performance with compensation.

Why Transparent and Achievable OTE Matters

A well-designed OTE (on-target earnings) and compensation plan is a win-win for salespeople and employers. It motivates salespeople to achieve their goals and rewards them accordingly, leading to:

• Improved Sales Performance: When salespeople are incentivized through a clear commission structure, they’re driven to close more deals.
• Increased Job Satisfaction: Earning a good income and feeling valued by their employer leads to happier and more engaged salespeople.

For employers, a competitive compensation plan is essential for attracting and retaining top sales talent, which can help them meet overall revenue goals and other business objectives. Here are the key factors to consider when crafting an OTE:

• Transparency: An OTE compensation structure should be based on experience, role, and industry standards. This allows employers to be honest in job ads and job descriptions and allows sales professionals to negotiate a package that reflects their skills.
• Achievability: The OTE should be realistic and attainable. Factors like sales cycle length should be considered. For instance, enterprise and government sales with long cycles often have guaranteed OTEs in the first year to account for the extended sales process.
• Target Setting: Clear and achievable sales targets, or quotas, are essential for a functional OTE. Some roles, like BDRs (Business Development Representatives), might have a qualified meeting quota as part of their goals.
• Salary Structure: A healthy OTE typically includes a pay mix of base salary and commission. This provides salespeople with a solid base salary (fixed income) for financial stability while offering the potential to earn more through commissions. Customer success roles often lean more heavily on base salary with smaller bonuses.

Pro Tip: It’s important to ensure your OTE is aligned with your business goals and has clear targets to meet revenue targets for the sales organization. Some businesses use sales commission software to help with this.

Avoiding OTE Pitfalls:

• Unrealistic OTEs: An inflated OTE that’s nearly impossible to achieve will demotivate salespeople. The average rep on your team should be able to reach the OTE realistically.
• Complexity: The OTE calculation shouldn’t require advanced math skills to understand. Keep it simple and transparent for both employers and salespeople.
• Focus on Long-Term Success: A guaranteed OTE in the first year might be necessary for some roles, especially those with long sales cycles. This ensures new salespeople can establish themselves without solely relying on commissions.

By following these principles, employers can create a competitive OTE structure that attracts top talent, motivates performance, and leads to a successful sales team. Remember, good salespeople will go for the company that offers financial incentives. 

How to Calculate OTE

Calculating OTE involves adding the base salary and expected commission earnings. 

To calculate commission, use this formula: multiply the percentage commission rate by the expected sales revenue. 

For example, if a salesperson has a 10% commission rate and is expected to sell $500,000 worth of products, their commission would be $50,000. 

Add the base salary and commission for a total expected earnings amount to calculate OTE. For instance, if a salesperson has a $60,000 base salary and $50,000 in commission, their OTE would be $110,000. 

Note: When drafting OTE plans, it’s best to loop in hiring managers during the hiring process to make sure compensation matches the industry standard. Job offers without a straightforward rep’s base salary can deter high-performing reps from applying for job postings.

Capped vs. Uncapped OTE

OTE structure can be either capped or uncapped.

“Capped OTE” refers to setting a maximum limit on commission earnings for salespeople, even if they exceed their quota.

• Pros: Benefits for the employer include predictable compensation costs and encouraging reps to focus on achieving their base quota rather than exceeding it significantly.
• Cons: Limited earning potential for high performers may impact their motivation after reaching the cap.

“Uncapped OTE” means no limit on how much commission sales representatives can earn, allowing for higher earnings.

• Pros: Can motivate top performers and attract ambitious salespeople.
• Cons: Quota attainment may be more difficult due to potentially aggressive targets, and income can be less predictable.

Job Titles and OTE Ranges

OTE varies depending on the sales role and industry. Here’s a glimpse into some typical ranges:

Sales

• Sales Development Representative (SDR): $50,000 – $70,000 OTE (often commission is mixed with a base salary)
• Account Executive (AE): $70,000 – $120,000 OTE (commission structure can vary)
• Enterprise Account Executive: $100,000+ OTE (uncapped commissions can push this significantly higher)

Customer Success

• Customer Success Manager: $60,000 – $100,000 OTE (typically tied to retention rates and often leans more on a base salary with a minor commission component)

The Bottom Line

It’s important to understand OTE and its components if you’re an employer or a candidate to confidently make informed decisions and navigate the world of sales compensation. Keep in mind that a high OTE is appealing, but having a quota that’s both realistic and attainable is equally essential.

OTE is just one piece of the puzzle. To motivate your team and drive consistent performance, your entire compensation plan needs to align with your sales goals. Check out our guide on building a sales force compensation plan that supports growth and retention.

For more sales tips and advice, visit our blog.

Step 1: Do Your Homework

What are other professionals in your industry and role making? Indeed.com, Salary.com, and Glassdoor.com are great places to research before salary negotiation begins. 

Step 2: Find Your Range

Consider your experience, the unique expertise you have grown, and the strengths and weaknesses you possess. How do these qualifications compare to others in your industry? Use this information to determine what a reasonable salary range is for you.

Step 3: Quantify Your Value and Performance

Turn your qualifications into easy-to-understand statements of value. Being able to cite specific numbers that prove your success is imperative. Consider your past achievements and what you expect to achieve in your new role when positioning yourself as an ideal candidate. 

Step 4: Aim High

When an employer asks about your pay expectations, start on the high end of your range. Give yourself room for salary negotiation.

Step 5: Prove You Deserve It

To show your employers that you deserve a premium salary, consider showing past W-2s that undeniably display evidence of past performance. When you receive an offer, know when and how to counter it. Be prepared to walk away if the final offer doesn’t represent your value. 

On the search for your next sales role? Join our global and growing job network here.

1. Communicate Your Year End Target

Keep energy levels high on your team by sharing your targets clearly and enthusiastically. Make sure every rep understands the importance of your goal.

2. Emphasize Key Details and Territories

Identify the deals that matter most, then make your sales executives available 24/7 to support reps in closing crucial deals. 

3. Support Discipline and Good Work Habits

Find creative ways to ensure your team is sleeping well, eating well, and taking adequate breaks during their work days. Refreshed and recharged employees will always sell more!

4. Reach Out to Your Existing Customers

Prepare and share the best deals you can to inspire repeat business and timely purchases. 

5. Monitor Activity Volumes for Signs of Deteriorating Effort

As a leader, you must act quickly when the number of calls, meetings, or proposals decreases below typical ratios. 

6. Track Deal Slide

Time kills deals. Don’t let open offers hang. Jump on deals at risk of sliding into the next quarter, find out what you need to do to close them, and reach your year end target.

7. Say No to Negativity and Distractions

Ask your employees to turn off the news and stop doom scrolling. An anxious mindset won’t put them in the right mind to sell. 

Build your high performing team for the new year with access to our global network of talent. Start your hiring journey with us here.

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• About
• Latest Posts

Ryan Thornton

Latest posts by Ryan Thornton (see all)

• 3 Ways Your Employees Will Sabotage Hitting Year End Targets – December 27, 2023
• 7 Ways to Hit Your Year End Target With Ease – December 20, 2023
• How to Handle Counter Offers — and Win Top Talent – December 18, 2023

Mistake 1. Not Previewing an Offer

The Fix:  Give candidates a verbal overview of your offer so they know how serious you are about hiring them. 

Mistake 2. Lowballing the Salary

The Fix:  Offer a salary above market. 

Mistake 3. Dragging Out the Process

The Fix:  Present an offer within 48 hours of the final interview. 

Mistake 4. Over Complicating Your Compensation Plan

The Fix:  Build your compensation plan over time and tailor it to your new hire’s motivations and needs.

Mistake 5. Assigning Small Territories

The Fix:  Evaluate your local market potential and communicate profitability to your candidate. 

Mistake 6. Failing to Provide Details

The Fix:  Share the tangible and intangible benefits included in your offer, such as health insurance, company car access, covered expenses, and schedule flexibility.

Mistake 7. Not Selling the Opportunity

The Fix:

• Express why the candidate is a great fit.
• Acknowledge the risk of change.
• Emphasize the autonomy and fun your new hire will have
• Show them how they’ll be both successful and satisfied at your company. 

Get expert guidance on your hiring strategy and avoid offer stage mistakes with us as your recruitment partner. Contact us to discuss your hiring needs.

• About
• Latest Posts

Kyle Fletcher

Latest posts by Kyle Fletcher (see all)

• Employee Referral Programs: Is Your Next Sales Rep Just One Connection Away? – December 27, 2023
• Don’t Make These 7 Offer Stage Mistakes – December 19, 2023
• Mastering Sales Management: 8 Sales Leadership Qualities Required for Success – December 15, 2023

Here are the four steps to promotion negotiation prep that we recommend:

#1 Prove That Your Value is Ever-Increasing 

Prepare to show how you’re an asset to your sales team and could become more of an asset in the future. And remember, your value extends beyond number-oriented goals.

#2 Prove That You Go Above and Beyond Your Personal Goals & Quotas

Consider how your Sales DNA comes through in the way you achieve and exceed your KPI’s. These qualities that you’ve proven as a representative can also be influential in a management position. 

#3 Prove That Your Sales Skills Will Transfer to Management

Many sales representatives lose one of the most motivating parts of their job when they make the transition from selling to management — the thrill of selling! Speak with your boss about the types of roles that would continue to motivate and fulfill you. 

#4 Prove That You Are Ready to Grow

Sales professionals who are coachable and eager to learn are managers who can grow into proficient sales leaders. Get a headstart by checking out our 20 Favorite Books About Sales Leadership.  

Evolve your sales career alongside other top-tier sales professionals → Join our network here.

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• About
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Brent Thomson

Co-Founder at Peak Sales Recruiting

Before Peak, Brent worked in sales and sales-leadership positions for 18 years. He has considerable experience building and running high-performance teams, which consistently won awards and exceeded sales targets. He was Vice President of Sales for a financial management consulting company, and served with Borland Software as a Regional Sales Manager.

Latest posts by Brent Thomson (see all)

• How to Hire Salespeople Outside Your Industry – December 20, 2023
• 10 Recruiter Skills You Can Leverage in Your Job Search – December 18, 2023
• How to Interview Sales Managers and Find Well-Rounded Talent – December 14, 2023

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Decide on a salary negotiation strategy as soon as you begin your job search. 

Avoiding negotiations could keep you working about eight years longer to make the same amount as your counterparts who do negotiate. So why wait? 

Most winning salary negotiations happen through a competing or collaborating strategy. In a study from Harvard Business Review, those who chose to negotiate their salary using these methods — rather than accepting the offer on the table — increased their starting pay by an average of $5,000. 

Be ready to articulate exactly why you deserve a higher salary. 

Do your research and understand what other professionals in the same position you seek are making. Think through what you bring to the table that other professionals in your industry don’t, then practice how you’ll address your salary and initiate the conversation in the interview process. Know when and how to counter, and be prepared to walk away if the final offer doesn’t represent your value. 

Save your time, increase your income, and evolve your sales career alongside other top-tier sales professionals → Join our network here.

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• About
• Latest Posts

Brent Thomson

Co-Founder at Peak Sales Recruiting

Before Peak, Brent worked in sales and sales-leadership positions for 18 years. He has considerable experience building and running high-performance teams, which consistently won awards and exceeded sales targets. He was Vice President of Sales for a financial management consulting company, and served with Borland Software as a Regional Sales Manager.

Latest posts by Brent Thomson (see all)

• How to Hire Salespeople Outside Your Industry – December 20, 2023
• 10 Recruiter Skills You Can Leverage in Your Job Search – December 18, 2023
• How to Interview Sales Managers and Find Well-Rounded Talent – December 14, 2023

Great salespeople are hunters. Great VPs are hunters who’ve learned how to organize and lead hunting parties. 

How much a VP/Sales gets paid is influenced by factors that include: 

• Track record
• Years of experience
• Size of employer
• Years of tenure at an employer
• Employer’s industry
• Industry knowledge and connections
• Method of compensation
• Location

Compensation Type

This plays out in how VP/Sales are paid. There’s typically a substantial base salary garnished with varying amounts of bonus money depending on the company and the industry. For example, an “average” VP/Sales in the financial industry is not unique in their organization; there may be dozens of VP/Sales in a large firm. 

For software companies or manufacturers, there may be just a few — or only one. As a result, total VP/Sales compensation (OTE, On-Target-Earnings) in some industries is lower than you might expect. 

There are also many types of additional compensation. Startups or tech companies may offer a mix of bonus cash and stock for reaching or exceeding goals. Others may stick with straight commission sharing. 

Location

In addition to its industry, where a company is located and its geographic footprint are major determinants of total income for their VP/Sales. A regional business in the Midwest is not going to pay what a global business pays. Large national/multinational companies tend to pay in the same ranges as others in their industry because they are competing for the same talent. 

Average Pay

According to research from Glassdoor, the average base pay for a VP/Sales is $100,000 across all industries and all experience levels. When you factor in the size of the company and years of experience as a VP/Sales, large differences in compensation emerge. For our analysis, we looked at average pay in four scenarios: 

• Low — less than one year experience at a small company with fewer than 50 employees total
• High — average salary for VP/Sales with 15 years experience at large companies (1,000 or more employees)
• Highest — Highest average salaries for AEs with 15 years experience at large companies
• High total comp — Total compensation for highest earners when OTE was included

Averages can be deceiving of course: There are VP/Sales making less than $100,000 and some making ten times that amount when total compensation is included. 

• Average: $100,000
• Low: $66,000
• High: $268,000
• Total Comp: $288,000

There’s significant variation between industries, too. In some, additional compensation is modest, keeping total comp down, while other industries have almost unlimited potential. 

BioTech & Pharma

The biotech and pharmaceutical world was rocked by the arrival of COVID-19 and the reverberations continue. While the direct impact was felt most acutely by the firms engaged in combating covid, the increased demand for healthcare supplies of all kinds affected many others. Rapid change will be a major factor going forward, as mass therapies (blockbuster drugs) give way to highly tailored individualized treatments. This will allow pharma sales executives to stay on top of a fast-moving marketplace: 

Bio-sensors, big data and IOT will accelerate the changes. 

• Average: $190,000
• Low: $82,000
• High: $221,000
• Total comp: $365,000

Business Services

The covid pandemic poured fuel on an already hot marketplace as digitalization of business processes and new digital services were transforming the business landscape. With an annual growth rate north of 10%, the demand for more business services — especially digital tools — shows no sign of slowing. The spread between the lowest and highest earners reflects the growth and importance of digital services.

• Average: $142,000
• Low: $64,000
• High: $296,000
• Total comp: $547,000

Consumer Services

Some of the major drivers of consumer services were walloped by restrictions and anxieties around coronavirus: travel, hospitality and recreation all took huge hits. As the pandemic eases, money will likely surge back into these sectors, producing some good years until the pent-up demand is satisfied. The amount of services spending in the overall economy is reflected in relatively higher pay for VP/Sales positions in the industry.  

• Average: $172,000
• Low: $113,000
• High: $249,000
• Total comp: $391,000

Health

An ageing population plus more available treatments and increasing diversity of delivery points should continue to foster a steady rise in health spending in the years ahead. Consolidation among traditional healthcare companies such as hospitals and medical practices is somewhat offset by the proliferation of “health adjacent” settings offering  services such as administration of cosmetic treatments and dietary/lifestyle coaching. 

• Average: $168,000
• Low: $97,000
• High: $182,000
• Total comp: $327,000

Tech: Hardware & Software

It’s not surprising that there’s a lot of compensation available in computer hardware and software sales. From established “blue chip” leaders like HP, Dell and Apple to startups making the IoT happen, digitalization is well established and shows no sign of slowing. The application of AI across the entire spectrum of our business and personal lives is already underway and will only accelerate in the years ahead, creating even more opportunities for sales leaders who can crush goals. 

• Average: $188,000
• Low: $102,000
• High: $222,000
• Total comp: $548,000

Tech: Services

Cloud-based software has conditioned the market to renting rather than buying, which promises to further boost spending on tech services, which has been clipping along at a growth rate of about 11%. New modalities — SaaS, blockchain, AI — have appeared and are setting off another major wave of digitization. As with their compatriots in the hardware/software sector, sales execs on the services side are paid very well. The numbers skew a bit lower, possibly because many companies in this sector are startups, which tend to pay a bit less but also offer big upsides through stock options.  

• Average: $194,000
• Low: $88,000
• High: $359,000
• Total comp: $516,000

Financial Services

Looking at the profits of big financial institutions and the pay scales for VP/Sales might raise the question of who’s getting all that money. Part of the answer is that some players, especially banks, have multiple VP/Sales, literally spreading the wealth among a larger number of executives. Financial services have been doing very well, but there are some questions about the future: Blockchain technology will be implemented throughout the industry, possibly reducing regulatory burdens and making more services more widely available. However, the counter trend is that cryptocurrencies may lead to significant assets moving out of traditional financial services companies. 

• Average: $135,000
• Low: $57,000
• High: $230,000
• Total comp: $391,000

Manufacturing

Companies with “digital maturity,” ones that have already adopted and implemented digital processes throughout their organizations, have done better over the past few years than their peers who are less mature. Labor shortages and supply chain issues continue to roil the industry, and over-reliance on low-inventory models has damaged companies who rely on a steady stream of shipments from their factories. 

Manufacturers who can bring production closer to home markets while maintaining margins stand the best chance of prospering. For VP/Sales, a company’s capacity to deliver will continue to be a key determinant of marketplace success. 

• Average: $185,000
• Low: $88,000
• High: $220,000
• Total comp: $353,000

Telecommunications

Change is a constant in the telecom world and the coming decade will be no exception as 5G rolls out across the world. Intense competition is the norm and that won’t lessen anytime soon as wire-based telecom solutions compete with fiber optic, cellular and even satellite providers. The global appetite for moving data is enormous and growing. The Iot alone promises to add trillions of bits to the packets moved by telecom providers, so the future is bright. For VP/Sales in this arena, the fights will be long and hard, but the rewards could be massive. 

• Average: $185,000
• Low: $126,000
• High: $208,000
• Total comp: $351,000

Read more of our Insights and get more tools to get your sales career to flourish.