Creating an On Target Commission Incentive

On Target Commission (OTC) is a structured incentive model where sales reps earn commission based on achieving specific sales targets within a defined period. It is closely tied to a rep’s variable salary.

Written By Gregor Koehler

Last updated 6 months ago

⚠️ Important: Before assigning OTC beneficiaries, you must configure each user’s variable salary in their profile. Without this step, the platform cannot calculate OTC allocations correctly.

Step 1. Details

Here you define the basic framework of the incentive.

  • Name → Use a clear label (e.g., “FY25 OTC - Enterprise AEs”).

  • Schedule → Define on which schedule OTC is calculated (monthly, quarterly, or annual).

  • Start & End Dates → Set active dates; keep recurring for long-term plans.

  • Beneficiaries → Select eligible users.

💡 Best Practice: Align schedules with your company’s quota cycles (e.g., quarterly for SaaS, annual for enterprise sales).

Step 2. Targets

Select the sales goals that will be used as benchmarks.

  • Weighting → Distribute importance across multiple targets (e.g., 70% Revenue, 30% New Logos).

💡 Best Practice: Use weighted targets to balance volume vs. value (e.g., reward both deal count and revenue).

Step 3. Earnings

Define the calculation engine for OTC.

  • Standard Multiplier → Default = 1. This multiplier scales OTC earnings.

    • Example: A 1.0 multiplier means 100% quota attainment = 100% variable pay.

    • A 1.2 multiplier means over-performance boosts payouts proportionally.

💡 Best Practice:

  • Keep the multiplier at 1 and adjust it in the next step.

Step 4. Adjustments

Refine the multiplier by quota attainment.

  • By Target Attainment → Example: Increase multiplier once rep achieves 100% of quota.

💡 Best Practice: Add accelerators here. Example:

  • 0–80% quota = 0.8x multiplier.

  • 81–100% quota = 1.0x.

  • 101–120% quota = 1.25x.

  • 121%+ = 1.5x.

This creates a stepped earnings curve, keeping reps motivated after hitting quota.

Step 5. Payout

Set when commissions are actually paid.

  • Payout Schedule → Monthly, quarterly, or aligned with payroll cycles.

💡 Best Practice:

  • Create a payout cycle that is aligned with quota cycles.

Key Takeaways

  • OTC = quota-driven model → ideal for SaaS, enterprise, and B2B teams.

  • Variable salary must be set in profiles before assigning beneficiaries.

  • Weighted targets = flexibility → balance multiple goals (e.g., revenue + retention).

  • Accelerators = motivation → drive performance beyond quota.

  • Payout timing matters → align with revenue recognition and cash flow.