Short answer: A classic account executive commission plan has a flat rate up to quota, a higher rate above quota and a threshold before commission starts. In this example, OTE is DKK 840,000 a year with a 60/40 pay mix, the quarterly quota is DKK 840,000 in new ARR, the rate is 10% up to quota and 15% above it, and no commission is paid below 50% of quota.
The example is illustrative, not a benchmark: the numbers show how the plan calculates, not what an account executive should earn. Amounts are in Danish kroner (DKK) before pension. It is one of ten examples in commission plans by role.
Who is this plan for?
The plan fits AEs who close new customers themselves, where the quota can be trusted.
- SaaS and subscription businesses that measure sales in new ARR or ACV.
- B2B companies with a sales cycle of weeks or a few months, so a quarter is a meaningful period.
- Teams with enough data to set a quota most reps can reach.
If your AEs mostly sell multi-year contracts, see the multi-year deal plan. If price is negotiated on every order and margins vary, see the gross margin plan.
The plan at a glance
| Element | Example |
|---|---|
| Base salary | DKK 42,000 a month (DKK 126,000 a quarter) |
| Variable pay at 100% | DKK 84,000 a quarter (DKK 336,000 a year) |
| OTE | DKK 840,000 a year |
| Pay mix | 60/40 |
| Metric | New ARR. Quota DKK 840,000 a quarter (DKK 3,360,000 a year, 4x OTE) |
| Rate | 10% of new ARR up to quota (DKK 84,000 / DKK 840,000) |
| Accelerator and threshold | 15% of ARR above quota (1.5x). Below 50% of quota (DKK 420,000) no commission is paid; above the threshold the rate applies from the first krone |
| Payout | Quarterly, with the salary for the month after quarter end |
| Clawback | Commission is reversed in the next statement if the customer cancels or does not pay within 90 days of signing |
The rate is worked out backwards: variable pay at 100% divided by quota gives 10%. How to set the quota itself is covered in the sales quota planning template.
Worked example: 70, 100 and 130% of quota
| Quota attainment | 45% | 70% | 100% | 130% |
|---|---|---|---|---|
| New ARR in the quarter | DKK 378,000 | DKK 588,000 | DKK 840,000 | DKK 1,092,000 |
| Commission up to quota (10%) | DKK 0 | DKK 58,800 | DKK 84,000 | DKK 84,000 |
| Commission above quota (15%) | DKK 0 | DKK 0 | DKK 0 | DKK 37,800 |
| Total commission | DKK 0 | DKK 58,800 | DKK 84,000 | DKK 121,800 |
| Base salary for the quarter | DKK 126,000 | DKK 126,000 | DKK 126,000 | DKK 126,000 |
| Pay for the quarter | DKK 126,000 | DKK 184,800 | DKK 210,000 | DKK 247,800 |
| Average per month | DKK 42,000 | DKK 61,600 | DKK 70,000 | DKK 82,600 |
At 130%, the AE earns 10% on the first DKK 840,000 (DKK 84,000) and 15% on the last DKK 252,000 (DKK 37,800). At 70%, the threshold is met, so the rate applies from the first krone: 10% of DKK 588,000 = DKK 58,800. At 45%, the AE is below the DKK 420,000 threshold and receives base salary only.
A similar example on an annual basis, plus salary statistics for the role, is in our account executive salary guide.
Pitfalls
- A threshold set too high. If the threshold is close to quota, AEs lose motivation in a weak quarter and deals get pushed into the next one. That is called sandbagging.
- A cliff at the threshold. Because the rate applies from the first krone, the deal that crosses the threshold is worth far more than the others. That is deliberate, but explain it so nobody is surprised.
- An accelerator with no budget. Model the cost at 130% and 150% before the plan goes out. Decide whether you want a cap; many companies avoid one because it holds back the best reps.
- Unclear point of earning. Write down whether commission is earned at signature, at first invoice or at payment.
- Changing quota mid-quarter. It feels like a pay cut. Set the quota before the period starts.
Danish rules to know
Short and general, not legal advice. Check your collective agreement and employment contract, and ask your lawyer or employers' association if in doubt.
- Holiday pay on commission: The employee is entitled to compensation for commission lost because of holiday (Danish Holiday Act, ferieloven, sections 17 and 19). If the AE sells less because she is on holiday, there is a loss to compensate. See holiday pay on commission.
- Sickness and parental leave: For salaried employees paid commission, pay during sickness and maternity leave must include the commission they would presumably have earned (Salaried Employees Act, funktionærloven, section 9(3)). Reduce the quarterly quota pro rata for longer absence, so sickness does not cost the threshold or the accelerator. See commission during sick leave.
- Bonus when someone leaves: A salaried employee who leaves during the financial year is entitled to a proportional share of profit shares, gratuities and similar payments (funktionærloven section 17 a). The rule concerns bonuses and similar payments. Commission on individual deals is normally earned deal by deal, but still describe what happens to pipeline deals when someone leaves. See commission after resignation.
- Changing the plan: A material change, such as a lower rate or a higher threshold, must be notified with the employee's individual notice period. New targets that the agreement expects to be set each period do not, as a rule, require notice. A higher threshold or a lower rate is usually a material change. Put the change rules in your commission agreement.
How to put the plan in writing
Use the commission plan template for the plan and the commission agreement template as an annex to the contract. You can take the clawback wording from the commission clawback policy template. Write down at least:
- What counts as new ARR and when a deal counts in the quarter.
- The threshold, and that the rate applies from the first krone once it is met.
- The accelerator and whether there is a cap.
- The clawback window and how reversals are offset.
Try the numbers
Enter your own quota, rate and accelerator in the commission accelerator calculator, and test the quota against OTE in the sales quota calculator.
Related plans
- All ten commission plans by role
- Multi-year deal commission plan
- SDR commission plan
- Sales manager commission plan
Terms and models used in this plan: accelerator with cliff, accelerator, decelerator, capped commission, sales quota, clawback.
How Prowi helps
Prowi calculates the plan live from your CRM data, reps follow their earnings in the app, and once the period is approved the amount goes on to payroll. Book a demo to see your own plan calculated.
FAQ
What does an account executive commission plan look like?
Most have a base salary, a commission rate on new ARR or ACV up to quota, a higher rate above quota and a clawback rule. In the example the rates are 10% and 15% with a threshold at 50% of quota.
What is an accelerator?
A higher rate once quota is reached. In the example, every krone above quota pays 15% instead of 10%. Read more about accelerators.
What is the difference between a threshold and a decelerator?
Below a threshold no commission is paid. A decelerator pays a lower rate below a level instead of zero. A decelerator is gentler in a weak quarter.
How do you calculate the commission rate?
Divide variable pay at 100% by the quota for the same period. DKK 84,000 / DKK 840,000 = 10%.
Sources
- Danish Salaried Employees Act (funktionærloven), consolidated act no. 1002 of 24/08/2017, sections 9 and 17 a. retsinformation.dk
- Danish Holiday Act (ferieloven), consolidated act no. 152 of 20/02/2024, sections 17 and 19. retsinformation.dk
This article is general information, not legal advice. The worked examples are illustrative.