A ceiling on the payout
A cap sets an upper limit on how much commission a rep can earn in a period or on a single deal. A hard cap stops commission completely. A soft cap lowers the rate above the limit, so extra sales still pay something. Caps are used when quotas are new, or when one large order could produce a payout nobody budgeted for.
Worked example
A rep earns 10% of sales with a hard cap of DKK 60,000 per quarter. The cap is reached at DKK 600,000 in sales. If she sells DKK 750,000, uncapped commission would be DKK 75,000, but she receives DKK 60,000. The last DKK 150,000 earns nothing. With a soft cap of 3% above the limit she receives DKK 60,000 + DKK 4,500 = DKK 64,500.
Combine with other models
A cap sits on top of a base model, usually a flat rate or tiered commission. It pulls in the opposite direction of an accelerator, so the two rarely belong in the same plan. If you only want to limit large single orders, cap per deal rather than per period. Run the base rate in the commission calculator and read about the commission cap in the glossary.
Pitfalls
Once the cap is hit, the rep has no reason to close more deals in the period. Deals slide into next quarter, and it is the best reps who hit the cap first. Set the cap high, for example at 150-200% of quota, or use a soft cap. A cap that is hit often is a sign the quota was set too low.
Danish rules
The cap belongs in the commission agreement, because the components of pay must be stated in writing (Danish Employment Contracts Act, section 3, in Danish). Adding a new cap to an existing scheme makes the rep worse off, and a material change must be notified with the employee's individual notice period. See the commission agreement template and check with your lawyer before changing a scheme.
Is a cap the same as a decelerator?
No. A decelerator lowers the rate below a threshold at the bottom of the curve. A cap limits the payout at the top. A soft cap works like a reverse accelerator: the rate drops above the limit instead of rising.
Should the cap apply per month or per year?
The longer the period, the less the cap punishes random swings. An annual cap with monthly advances is fairer to reps with uneven months than a monthly cap. Write down how advances are settled at year end.
In Prowi
Create the plan, pick the measurement point and period, set the rule, assign it to roles. From there every closed deal in your CRM is priced live, the rep sees it in the app, the manager approves, and finance exports the file. When data changes, the correction follows automatically.