Short answer: An account manager commission plan can combine commission on expansion revenue with a bonus on NRR (net revenue retention), so the AM has to both grow customers and keep them. In this example the AM has a book of DKK 6,000,000 ARR, OTE is DKK 720,000 a year with a 70/30 pay mix, expansion pays 9% commission, and the DKK 108,000 NRR bonus pays in full at 105% NRR and not at all below 100%.
The example is illustrative, not a benchmark: the numbers show how the plan calculates, not what an account manager 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?
- Account managers with a fixed book of existing customers and responsibility for both expansion and renewal.
- Subscription and SaaS businesses where ARR can be measured per customer.
- Companies where the AM can influence churn, for example through customer meetings, onboarding new users and renewal conversations.
If the AM handles renewals only, with no expansion, see the renewal commission plan. If you have a customer success team as well, see the customer success bonus plan so the two plans do not pay for the same thing.
The plan at a glance
| Element | Example |
|---|---|
| Base salary | DKK 504,000 a year (DKK 42,000 a month) |
| Variable pay at 100% | DKK 216,000 a year: DKK 108,000 expansion commission and DKK 108,000 NRR bonus |
| OTE | DKK 720,000 a year |
| Pay mix | 70/30 |
| Metrics | Expansion ARR (target DKK 1,200,000) and NRR for the book (target 105%) |
| Rate | 9% of expansion ARR |
| Accelerator and threshold | NRR bonus: zero below 100% NRR, 50% of the bonus at 100%, plus 10 percentage points per NRR point, capped at 150% at 110% |
| Payout | Expansion commission quarterly. NRR bonus once a year, after year end |
| Clawback | Expansion commission is reversed if the customer downgrades again within 90 days |
NRR is (ARR at the start of the year minus churn and downgrades plus expansion) divided by ARR at the start of the year. With DKK 6,000,000 at the start, DKK 900,000 churn and DKK 1,200,000 expansion, NRR is 105%. Read more about NRR.
Worked example: 70, 100 and 130% of the expansion target
Churn and downgrades are set at DKK 900,000 in all three columns, a GRR of 85%. Only expansion varies.
| Expansion vs target | 70% | 100% | 130% |
|---|---|---|---|
| ARR at start of year | DKK 6,000,000 | DKK 6,000,000 | DKK 6,000,000 |
| Churn and downgrades | DKK 900,000 | DKK 900,000 | DKK 900,000 |
| Expansion | DKK 840,000 | DKK 1,200,000 | DKK 1,560,000 |
| NRR | 99% | 105% | 111% |
| Expansion commission (9%) | DKK 75,600 | DKK 108,000 | DKK 140,400 |
| NRR bonus, share paid | 0% | 100% | 150% |
| NRR bonus | DKK 0 | DKK 108,000 | DKK 162,000 |
| Variable pay | DKK 75,600 | DKK 216,000 | DKK 302,400 |
| Base salary | DKK 504,000 | DKK 504,000 | DKK 504,000 |
| Annual pay | DKK 579,600 | DKK 720,000 | DKK 806,400 |
At 70%, NRR is (DKK 6,000,000 - DKK 900,000 + DKK 840,000) / DKK 6,000,000 = 99%. The book has shrunk, so the NRR bonus drops out and the AM earns expansion commission only. At 130%, NRR is 111%, but the bonus is capped at 150%, so it pays DKK 162,000 and no more.
Another example, with bonuses on retention, growth and margin for key accounts, is in our key account manager salary guide.
Pitfalls
- A sharp step at 100%. The plan jumps from zero to 50% of the bonus at 100% NRR. That is a strong signal to keep the book growing, but a single bankruptcy can cost the whole bonus. Consider excluding bankruptcies, or start the bonus at, say, 98%.
- Expansion without retention. If you only pay commission on expansion, the AM can earn well in a year when the book shrinks. The NRR part fixes that.
- The book changes during the year. If the AM gains or hands over customers, starting ARR must be adjusted. Write the rule down.
- Price increases. Decide whether a general price increase counts as expansion. If it does, NRR rises without any effort from the AM.
- Paying twice. If an AE also earns commission on expansion in the AM's accounts, or customer success earns a bonus on the same NRR, make that a deliberate choice. See upsell and cross-sell commission.
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). Expansion commission can be affected by holiday. The NRR bonus is an annual target, so the loss is harder to see, but describe the method. 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)). For longer absence, you can reduce the expansion target and assess the NRR target pro rata. 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 NRR bonus is an annual bonus. If the AM leaves during the year, section 17 a can give a right to a proportional share. Write down how the share is calculated. 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. Put the change rules in your commission agreement.
How to put the plan in writing
Use the commission plan template for expansion commission and the bonus agreement template for the NRR bonus. Write down at least:
- Which customers are in the book, and starting ARR on 1 January.
- How churn, downgrades and expansion are measured, and whether price increases count.
- The NRR bonus scale and the cap.
- What happens if the book changes or the AM leaves during the year.
Try the numbers
Test pay mix and OTE in the OTE calculator, and set the expansion target in the sales quota calculator.
Related plans
- All ten commission plans by role
- Renewal commission plan
- Customer success bonus plan
- Key account manager commission plan
Terms and models used in this plan: retention-based commission, NRR, churn rate, upsell and cross-sell commission, residual commission, bonus scheme.
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
How do account managers earn commission?
Usually as commission on expansion revenue from existing customers, a bonus for retaining customers, or a combination. The example combines expansion commission with an NRR bonus, so both count.
What is a good NRR?
It depends on the business. Above 100% means the book grows even after lost customers are subtracted. In the example the target is 105%.
How is NRR calculated?
(Starting ARR - churn and downgrades + expansion) / starting ARR. With DKK 6,000,000, DKK 900,000 and DKK 1,200,000 that gives 105%.
Should expansion be measured gross or net?
Gross expansion is easiest to understand but can pay commission in a year when the book shrinks. An NRR condition as in the example, or commission on net growth, solves that.
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.