Understanding Compensation Plans
A Compensation Plan (or "comp plan") is the rulebook that tells Earnest how to calculate commissions for your team. This article explains every building block — from basic rate math to advanced features like ramp schedules, accelerator tiers, and kicker bonuses.
The Basics
Every comp plan has a few core settings:
| Setting | What It Does |
|---|---|
| Name | A descriptive label (e.g., "AE 2026 Accelerator Plan"). |
| Payout Frequency | How often payouts are calculated — Monthly or Quarterly. |
| Metric Type | What you're measuring: Revenue (monetary amounts) or Unit (counts like meetings or demos). |
| Base Rate Multiplier | A global scaling factor applied to all commission. Defaults to 1.0 (no change). |
The Effective Rate
The effective rate is the percentage of each unit of quota (or per-unit payout) that a rep earns as commission. Earnest derives it automatically:
Effective Rate = (OTE − Base Salary) ÷ Annual Quota
For example, if a rep has a 200,000 OTE, a 100,000 base salary, and a 1,000,000 annual quota:
Effective Rate = (200K − 100K) ÷ 1M = 10%
This means for every unit of revenue up to quota, the rep earns 10% in commission.
For Unit plans, the effective rate works the same way, or you can set a flat payout rate (e.g., 50 per meeting booked) that bypasses the OTE-based formula entirely.
Commission Tiers (Accelerators)
Tiers define what happens when a rep exceeds — or falls short of — quota. Each tier covers a range of attainment percentage and applies a rate multiplier to the commission rate.
How Tiers Work
| From | To | Rate Multiplier | What Happens |
|---|---|---|---|
| 0% | 100% | 1.0× | Revenue up to quota earns at the base rate. |
| 100% | 120% | 1.5× | Revenue between 100–120% of quota earns at 1.5× the base rate. |
| 120% | — | 2.0× | Revenue above 120% earns at 2× the base rate. (Uncapped tier.) |
Example: A rep with a 100K quota and 10% effective rate closes 130K in a month.
- First 100K (up to quota): 100K × 10% × 1.0 = 10,000
- Next 20K (100–120% tier): 20K × 10% × 1.5 = 3,000
- Last 10K (120%+ tier): 10K × 10% × 2.0 = 2,000
Total commission: 15,000
Caps & Floors
- Commission Cap — the maximum commission a rep can earn in a single period. If the calculated amount exceeds the cap, it is clamped to the cap value.
- Commission Floor — a guaranteed minimum. If the calculated amount falls below the floor, the rep still receives the floor amount.
Kicker Bonuses
A kicker is a one-time bonus awarded when a rep reaches a specific attainment threshold. Unlike tier multipliers (which change the rate for overage revenue), kickers are flat payouts expressed as a percentage of the rep's variable compensation (OTE minus base salary).
Kickers are cumulative. If a rep hits multiple thresholds, they earn every applicable kicker.
| Trigger (Attainment) | Bonus % | Description |
|---|---|---|
| 100% | 5% | 5% of variable comp awarded at quota. |
| 150% | 10% | An additional 10% of variable comp at 150% attainment. |
Example: A rep with 100K variable comp hits 160% attainment. They earn both the 5% kicker (5,000) and the 10% kicker (10,000) = 15,000 in bonuses, on top of their tiered commission.
Ramp Schedules
New hires typically need time to build pipeline. Ramp steps let you define a reduced-quota period for the first few months of a rep's tenure — so they're not penalized for starting mid-cycle.
Each ramp step defines:
| Field | What It Does |
|---|---|
| Month Index | The 1-based month of tenure (Month 1 = their start month). |
| Quota Percentage | What fraction of the full quota applies. E.g., 0.5 = 50% of normal quota. |
| Guaranteed Draw | Optional: a guaranteed minimum payout expressed as a % of variable comp. Draws are always non-recoverable — the rep keeps the top-up regardless of future performance. |
| Enable Schedule | When enabled, the full tier/accelerator schedule applies during this ramp month. When disabled (the default), the rep earns at the flat base rate regardless of attainment. |
How Ramp Interacts with Quota
If a ramp step has a 50% quota percentage, the rep's effective quota for that month is halved. Their attainment is measured against the reduced number, so hitting 50K on a 100K full quota is treated as 100% attainment during ramp.
Guaranteed Draw
If a ramp step includes a guaranteed draw of 75%, and the rep's variable compensation is 100K/year (~8,333/month), they are guaranteed at least 75% × 8,333 = 6,250 that month. If their earned commission exceeds the draw, the draw has no effect. If it falls short, Earnest tops them up to the guaranteed amount.
Prorate Accelerators
The Prorate Accelerators flag (found in plan settings) changes how tier multipliers are applied when a rep is prorated — meaning they didn't work the full period (e.g., they started mid-month or were on leave).
| Setting | Behavior |
|---|---|
| Off (default) | Accelerator multipliers apply at full strength regardless of proration. |
| On | Accelerator multipliers are blended by the proration factor. A 2.0× tier for a rep who worked 15 of 30 days becomes 1.0 + (2.0 − 1.0) × 0.5 = 1.5×. |
This prevents a rep who worked half the month from getting the full benefit of a high accelerator tier on a small amount of overage.
Kicker bonuses are also scaled when this flag is enabled.
Seasonality
Each team can configure quarterly seasonality weights (e.g., Q1 = 15%, Q2 = 25%, Q3 = 25%, Q4 = 35%). These weights must add up to 100% and they adjust the monthly quota so that heavier-demand quarters carry proportionally larger targets.
Example: A rep with a 1.2M annual quota on a team with a Q4 weight of 35%:
Q4 quarterly quota = 1.2M × 35% = 420K Monthly quota in Q4 = 420K ÷ 3 = 140K (vs. the default 100K without seasonality)
Evaluation Period (QTD Mode)
By default, attainment resets each payout period (monthly or quarterly). But sometimes you want a monthly payout plan that evaluates attainment on a quarterly basis. This is called QTD (Quarter-to-Date) mode.
When QTD mode is enabled:
- Each month, Earnest calculates your cumulative revenue and quota for the quarter so far.
- It applies the tier schedule against the QTD attainment.
- It deducts any prior payouts from earlier months in the quarter.
- The result is a true-up — you only receive the incremental difference.
This prevents double-paying accelerators: a rep who earns a big deal in Month 1 won't get the same bonus recounted in Months 2 and 3.
How Multipliers and Kickers Work Together
It's important to understand that tier multipliers and kicker bonuses are independent systems that combine additively:
- Tier multipliers change the rate at which overage revenue earns commission.
- Kicker bonuses are flat amounts based on a percentage of variable comp.
The final commission formula:
Total = Base Commission + Accelerator Commission + Kicker Bonuses + Draw Top-Up (if applicable)
Each piece is shown separately on the rep's commission statement so there's never any ambiguity about where the numbers come from.
Frequently Asked Questions
Q: Can I assign different plans to different titles within the same team? Yes. Each team title can have an optional comp plan override. If a title has its own plan, it takes priority over the team's default plan assignment. This is useful for giving managers a different plan than their direct reports.
Q: What happens if I change a plan after payouts have been generated? Published payouts are frozen — they include a plan snapshot that captures the exact plan configuration at the time of generation. Changing the plan only affects future calculations.
Q: Can a rep be on a ramp schedule and still earn accelerators? It depends on the ramp step's Enable Schedule setting. By default, the schedule is disabled — the rep earns at a flat base rate during ramp. If "Enable Schedule" is turned on for a specific ramp step, the full tier/accelerator schedule applies against the reduced quota.
Q: What if I set both a cap and a floor? Both are respected. The floor is applied first (guaranteeing a minimum), and the cap is applied second (ensuring the total doesn't exceed the maximum). If the floor is higher than the cap, the floor wins — the rep always gets at least the guaranteed minimum.
Q: How are quotas resolved if a rep has no explicit quota set? Earnest follows a fallback chain: Position-level quota override → Title default quota → 0 (no quota). For manager titles with a "Rollup" quota type, the quota is automatically calculated as the sum of all direct reports' quotas.