Understanding Compensation Plans

A compensation plan is the rulebook that tells Earnest how to calculate commission. This article covers every building block — from rate math through accelerators, ramps, ratio plans and multi-plan splits.

One thing to know up front: plan logic is effective-dated. Editing a plan does not rewrite history — it schedules a new version from a date you choose, and past periods keep calculating against the version that was live at the time. See Scheduled Changes & History.

If you are still evaluating, the plan builder feature overview covers what is included, and the Google Sheets comparison covers why this logic is hard to keep correct in a spreadsheet.

Plan basics

Frequency also sets the period divisor used to split annual figures: 12 for monthly, 4 for quarterly.

The three metric types

Revenue

Performance is measured in money. Total volume is the sum of credited activity amounts in the rep's quota currency.

Attainment = Total Revenue ÷ Effective Quota × 100

Unit

Performance is measured in counts — meetings, demos, qualified leads. Configure:

• Unit Label (required) — what one unit is called, shown on dashboards and statements.
• Flat Payout Rate (optional) — a fixed amount per unit, e.g. 50 per meeting.

With a flat payout rate the plan pays units × rate × base payout rate and does not use the tier schedule at all — no accelerators, no milestone bonuses. Leave it blank to run units through the normal OTE-derived rate and tier schedule instead.

Ratio (per FTE)

Performance is a currency numerator divided by a headcount denominator, measured against a per-head goal — for example $100K of sales per FTE.

Attainment = Σ numerator ÷ (goal × Σ FTE) × 100

The denominator is the active-day-weighted headcount of the rollup subtree — everyone reporting into the person the payout is for, nested. Someone who joins mid-period counts proportionally.

Because it depends on a subtree, a ratio plan only works for a rollup scope. Assigning one to an individual contributor with no reports fails rather than silently treating them as 1 FTE.

If the derived headcount is wrong for a period — a secondment, a contractor, a reorg mid-month — an admin can set an FTE override for that person and period from the plan screen. The rep and their manager see the resolved denominator on the payout, marked as derived or overridden, but only an admin can change it.

The effective rate

For Revenue and Unit plans without a flat rate, Earnest derives the commission rate:

Effective Rate = (OTE − Base Salary) ÷ Annual Quota

A rep with 200,000 OTE, 100,000 base and a 1,000,000 quota earns (200K − 100K) ÷ 1M = 10% of every unit of revenue up to quota.

For ratio plans the rate is calibrated against the goal-and-headcount target rather than a flat quota, but the shape is the same: hitting target pays the full variable component.

Commission tiers (accelerators)

Tiers define what happens above and below quota. Each covers a range of attainment percentage and applies a rate multiplier.

Tiers are marginal, like tax brackets — crossing a boundary only accelerates the revenue past it.

Example. A rep with a 100K quota and a 10% effective rate closes 130K:

1. First 100K: 100K × 10% × 1.0 = 10,000
2. Next 20K: 20K × 10% × 1.5 = 3,000
3. Last 10K: 10K × 10% × 2.0 = 2,000

Total: 15,000

The top tier must be open-ended, so there is always a rule for arbitrarily high performance.

Cap and floor

• Cap clamps the total down. Floor lifts it up.
• Both are applied after bonuses, to the combined total.
• If the floor is higher than the cap, the floor wins — the guaranteed minimum is always honoured.

Kicker bonuses

A kicker is a lump sum awarded for reaching an attainment threshold, expressed as a percentage of the rep's variable compensation (OTE minus base salary). Kickers attach to tiers and are cumulative — hit several thresholds and you earn all of them.

A rep with 100K variable comp reaching 160% earns both — 5,000 + 10,000 = 15,000 in bonuses, on top of tiered commission.

Ramp schedules

Ramp steps give new hires a reduced quota for their first months.

Enable Schedule matters more than it looks. When off (the default), the ramp month is paid at a flat 1× rate with no accelerators and no milestone bonuses, regardless of attainment. That is usually what you want during onboarding — but it also means such a period cannot be auto-corrected later, because replaying it through the raw tier schedule would price accelerators the rep was never eligible for.

Guaranteed draw

A rep with 100K annual variable comp (~8,333/month) on a step with a 75% draw is guaranteed 75% × 8,333 = 6,250 that month. Earn more and the draw does nothing; earn less and Earnest tops them up to the guarantee.

Proration

If a rep did not work the whole period — started mid-month, left, or changed position — their quota, OTE and base salary are reduced proportionally so attainment is measured fairly.

Prorate Accelerators decides whether tier multipliers are also scaled:

Seasonality

Each team can set quarterly weights (e.g. Q1 15%, Q2 25%, Q3 25%, Q4 35%) totalling 100%, so heavier quarters carry proportionally larger targets.

A rep with a 1.2M annual quota on a team weighted 35% to Q4:

Q4 quota = 1.2M × 35% = 420K → monthly = 420K ÷ 3 = 140K (against 100K unweighted)

Evaluation period (QTD mode)

By default attainment resets each payout period. QTD mode pays monthly but evaluates attainment across the quarter:

1. Each month, Earnest totals revenue and quota for the quarter so far.
2. It applies the tier schedule to that cumulative attainment.
3. It deducts commission already paid in earlier months of the quarter.
4. You receive the incremental true-up.

This stops a big month-1 deal from earning its accelerator again in months 2 and 3.

Team plan mix

A team can split its variable comp across several plans at once — for example 70% new business, 30% renewals.

Activities are routed to a plan by the planName column on import (see Data Imports & Validation), or the default plan if untagged.

Reps on a mix get a per-plan breakdown on their statement showing each plan's quota, attainment and commission separately.

Two caveats. A mixed payout cannot be auto-corrected by a recompute — post a manual adjustment instead. And a mix always evaluates monthly, so QTD mode does not apply to it.

How the pieces combine

Total = Base Commission + Accelerator Commission + Kicker Bonuses + Draw Top-Up, then clamped by cap and floor.

Each component is shown separately on the statement, so there is never ambiguity about where a number came from. See Reading Your Commission Statement.

Frequently asked questions

Q: Can different titles on one team have different plans? Yes. A team title can carry a comp plan override, which takes priority over the team's default assignment — useful for putting managers on a different plan from their reports.

Q: What happens if I change a plan after payouts are generated? Nothing retroactive. Editing plan logic creates a new version effective from a date you pick; existing payouts keep their frozen snapshot. See Scheduled Changes & History.

Q: Can a rep on a ramp still earn accelerators? Only if that ramp step has Enable Schedule turned on. By default a ramp month pays a flat rate.

Q: What if I set both a cap and a floor? Both apply, after bonuses. The cap clamps down, the floor lifts up, and the floor wins if they conflict.

Q: How is quota resolved when a rep has no explicit quota? Position-level quota override → title default quota → 0. For a manager title with a Rollup quota type, the quota is the sum of their direct reports' resolved quotas for the period.

Q: Can I model a plan change before committing it? Yes — the Simulator forecasts, backtests against real history, and can search for a plan that hits a budget. See Modeling & Optimizing Plans.

Q: Does the simulator handle ratio plans? No — ratio plans are excluded from the simulator. Model those changes by adjusting the goal and reviewing the effect on a draft period.