B2B Insights
Lauren Daniels
November 28, 2025
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Did you know your SDR commission plan could determine whether your team generates 30% to 40% of your new business revenue? For a company targeting $10 million in new revenue, that's at least $3 million riding on how effectively you motivate your sales development reps.
The stakes couldn't be higher when designing SDR compensation structures. According to Glassdoor, the average U.S. Field Sales Representative earns around $62,000 in base salary plus an additional $53,000 in commissions and bonuses.
When crafting effective SDR comp plans, the right approach depends on variables like your budget, team size, and specific sales goals. While a general rule suggests maintaining a quota-to-OTE ratio between 5:1 and 8:1, only about 68% of SDRs actually reach their quotas.
Choosing the right commission structure is about creating a system that drives behaviors aligned with your company's objectives. Let's explore nine proven SDR commission plans that actually motivate reps and drive results.
The straight commission structure represents the highest risk-reward model in SDR compensation. A 100% commission plan pays sales development representatives exclusively based on their sales performance with no guaranteed base salary.
SDRs earn solely through the deals they close. If an SDR generates $100,000 in sales with a 5% commission rate, they earn $5,000. Companies typically offer significantly higher commission rates - often 18-20% compared to the standard 10% in SaaS.
Pros: Unlimited earning potential, higher commission rates, total income control, cost-effectiveness for businesses, and rapid market entry for startups.
Cons: Income instability, high turnover rates (99% of commission-only reps fail to make a livable wage), difficult recruitment, potential for unethical practices, and limited teamwork.
Best for cash-strapped startups, short sales cycles, one-call-close products, and self-motivated individuals comfortable with risk-taking.
Among the most popular SDR commission plans, the base salary plus commission structure strikes a balance between security and incentive.
This hybrid model combines fixed base pay with variable commission. The typical split follows a 60:40 ratio (60% base salary, 40% commission). For example, an SDR earning $76,000 annually would receive approximately $45,600 as base salary and $30,400 in potential commission.
The variable portion typically rewards qualified appointments set, opportunities created, response time for inbound leads, and closed deals.
Pros: Financial stability, balanced motivation, broader talent attraction, team security, and alignment with company goals.
Cons: Higher fixed costs, potential complacency, administrative complexity, and possible team tension over perceived inequities.
Ideal for moderate to long sales cycles, onboarding periods, quality-focused teams, complex products/services, and pipeline development roles.
Tiered commission structures use progressively higher commission rates to reward SDRs who exceed their targets.
SDRs earn escalating commission rates as they achieve higher sales milestones. An SDR might earn 8% commission until reaching $100,000 in sales, then 12% for sales between $100,000 and $150,000, with higher rates for subsequent tiers.
Organizations typically establish 4-5 tiers, with each representing a different performance level.
Pros: Enhanced motivation, performance improvement, increased engagement, team collaboration, and retention of top talent.
Cons: Calculation complexity, potential for unhealthy competition, implementation challenges, quantity over quality concerns, and resource requirements.
Best for established sales teams looking to scale, companies selling high-ticket items, deals with wide variability in value, and when current plans aren't generating desired results.
The single-rate commission plan applies one consistent commission percentage to every deal an SDR closes.
SDRs earn the same percentage on every deal regardless of size, timing, or complexity. An SDR with $50,000 in variable compensation and a $500,000 annual target would earn a 10% commission on all deals.
About 10% of all compensation plans follow this model because it eliminates confusion about how reps get paid.
Pros: Extreme simplicity, complete clarity, quick implementation, easy explanation, and foundation for growth.
Cons: Limited motivation for overachievement, no penalty for underperformance, potential for complacency, and lack of strategic flexibility.
Perfect as "first" plans for startups, new territories, or newly launched products. Works well for businesses with fluctuating quotas and organizations prioritizing straightforward administration.
Profit-focused SDR comp plans align sales behaviors with company profitability by basing payouts on profit generated rather than total revenue.
SDR compensation is calculated as a percentage of the profit earned on each sale. If an SDR sells a product for $5,000 with a $2,000 production cost, the gross margin is $3,000. With a 10% commission rate, the rep earns $300.
Commission percentages typically run higher - sometimes up to 50% - reflecting the smaller base amount.
Pros: Aligns sales incentives with profitability, encourages focus on high-margin products, protects against discounting losses, and creates strategic selling approaches.
Cons: Can discourage appropriate discounting, is more complex to track, requires accurate cost data, and may need additional SDR training.
Ideal for companies with widely varying profit margins, industries with fluctuating product costs, and organizations aiming to reduce excessive discounting.
The commission draw plan provides advances against future commission earnings, ensuring consistent income during slow periods or training phases.
A commission draw functions as an advance payment against anticipated future commissions. Two primary forms exist:
Recoverable draw: Works as a loan that SDRs must repay through future commission earnings.
Non-recoverable draw: Provides a guaranteed minimum payment that doesn't need repayment, establishing a commission floor.
Pros: Provides financial stability, helps retain talent, supports lengthy sales cycles, creates income consistency during training, and protects against external factors.
Cons: May reduce motivation, create complex accounting, strain company cash flow, and increase administrative burden.
Excellent for new SDRs during ramp-up periods (2-3 months), long sales cycles, territory redesigns, seasonal fluctuations, and strategic market expansion.
The residual commission plan rewards SDRs with ongoing payments for as long as their customers continue to generate revenue.
SDRs earn continuous income from clients they initially acquired as long as those customers remain active. An insurance salesperson who signs an account with $3,000 monthly premiums earns $150 each month with a 5% residual commission.
Pros: Creates steady income streams, incentivizes long-term relationships, provides passive income potential, reduces turnover, and encourages customer satisfaction focus.
Cons: Takes substantial time to build meaningful income, may discourage pursuing new customers, is complex to track, potentially costly long-term, and creates delayed income realization.
Thrives in subscription-based or recurring revenue models like SaaS, telecommunications, insurance, and financial services, where customer lifetime value exceeds initial purchase.
Team-based incentives reward SDRs based on collective sales performance within a defined geographic area or market segment.
The territory volume plan pools sales within a specific territory and divides commission among all SDRs operating in that region. If three representatives collectively generate $78,000 against a $75,000 quota, they might earn 20% commission ($15,600) split equally.
Pros: Fosters collaborative selling, supports regional strategies, encourages knowledge exchange, and promotes team-oriented environments.
Cons: Might lead to resentment with poorly defined territories, creates regional competition, potentially penalizes top performers, and allows underperformers to benefit.
Most effective in industries requiring coordinated selling efforts, like pharmaceuticals, consumer goods, and technology, with clear territorial divisions.
Fixed salaries deliver predictable income without performance incentives, contrasting sharply with commission-based structures.
SDRs receive a set salary regardless of individual sales performance - typically around $60,000 annually. This approach eliminates variable pay components, assuming sales reps can be trusted to perform effectively without direct financial incentives.
Pros: Offers predictability, simplifies budgeting, enables focus on non-revenue tasks, fosters collaboration, and positions sales as "no-pressure."
Cons: Lacks performance incentives, struggles to attract top talent, can lead to lower productivity, and makes tying performance to goals challenging.
Suitable for entry-level sales support roles, internal SDRs, tightly regulated sectors, or organizations heavily reliant on inbound leads.
Choosing the right SDR commission structure depends on your specific business goals, team composition, and financial considerations. The perfect commission plan balances risk and reward appropriately for your sales environment.
Consider how your structure aligns with broader company objectives. Tiered models push top performers to exceed quotas, while gross-margin plans focus on profitability rather than just revenue generation. The most effective SDR comp plans evolve as your organization grows, adapting to changing market conditions and team dynamics.
Start with a clear understanding of your sales cycle, profit margins, and team culture before selecting a commission structure. Investing time in designing the right plan pays dividends through improved rep motivation, reduced turnover, and ultimately, stronger sales performance.
A well-designed commission plan motivates. A well-supported SDR team performs. See how Whistle helps businesses turn strategy into measurable pipeline growth. Visit Whistle.
