Commission plan template: the short answer
A commission plan is the document you give the sales team so everyone knows what earns commission: purpose, who is covered, plan period, quota, rates and tiers, accelerators, crediting and splits, payout timing, clawbacks, statements and disputes, changes and approvals. Download our free Word template, fill in the fields in brackets and send it out before the period starts.
Download the commission plan template (Word, free)
The template is a starting point, not legal advice. It is written with Danish employment rules in mind. Adapt it to your collective agreement and contracts, and have it reviewed if you are in doubt.
The template has 14 sections, a table with the plan's key facts, an acknowledgement the rep signs, and an appendix with terms per rep. The fields you fill in are in lavender brackets, and short guidance notes in italics explain what each section needs to cover. It is part of our free commission and sales compensation templates.
Commission plan or commission agreement?
The two documents work together. A commission plan describes the rules for the whole team for a period, usually a year. A commission agreement is an annex to each rep's employment contract and makes the terms part of the employment.
| Commission plan | Commission agreement | |
|---|---|---|
| Applies to | The whole team or a role | One rep |
| Duration | The plan period, usually a year | The employment, until changed |
| Content | Quotas, rates, crediting, processes and approvals | Basis, rates, holiday, absence, leaving and notice |
| Signed by | The rep acknowledges receiving the plan | Both parties |
If you do not yet have an agreement with your reps, start with our free commission agreement template. In Denmark, the components of pay must be stated in writing in the employment contract or an annex, so a plan the rep has only received as a handout is not enough on its own.
What should a commission plan include?
| Section | What it covers | Why it matters |
|---|---|---|
| Key facts | Roles, period, plan owner, approval and version | Everyone can see which plan applies |
| 1. Purpose | What the plan rewards | A plan steers behaviour, so it must point the right way |
| 2. Who is covered | Roles, new reps, role changes and leavers | Avoids doubt in the middle of the period |
| 3. Plan period and settlement | Period and settlement per month or quarter | Decides when quota and accelerators are measured |
| 4. Quota and targets | Quota per rep, ramp and absence | Quota is the basis for the rates |
| 5. Basis and rates | Revenue, gross margin or ACV, and rates per role | The most common source of disagreement |
| 6. Accelerators and caps | Rate above quota, decelerator and cap | Makes the cost predictable |
| 7. Crediting and splits | Who gets the sale and how it is split | Prevents disputes inside the team |
| 8. When a sale counts | Signature, invoice or payment, and payout timing | Connects the plan to payroll |
| 9. Clawbacks and corrections | Window and offset | Reps must know the rule in advance |
| 10. Statements and disputes | Deadlines and escalation | Gives questions a fixed route |
| 11. Approvals | Who approves the plan, quotas, splits and statements | No payout without a check |
| 12. Changes | Notice and new periods | Material changes need individual notice |
| 13. Special situations | Interpretation, large deals and gaming | A rule for the unexpected |
| 14. Acknowledgement and appendix A | The rep's signature and terms per rep | Documents that the plan was received |
The sections that most often cause problems
Quota and rates
The rate is tied to quota and variable pay: a commission rate is usually variable pay at 100% divided by quota. The template has a table with rate up to quota, rate above quota and cap per role, plus a worked example. Example: an account executive with a monthly quota of DKK 300,000, 8% up to quota and 12% above, sells DKK 360,000. Commission is 300,000 × 8% + 60,000 × 12% = 24,000 + 7,200 = DKK 31,200.
To work out quotas and rates before you write the plan, use our free sales quota planning template for the quotas and the OTE and pay mix template for the rates.
Crediting and splits
Who gets the sale when an SDR booked the meeting, or the customer has sites in two territories? The template uses the deal owner in the CRM as the main rule and has a table with fixed splits. Any other split must be agreed in writing before the deal closes. Read more about sales crediting in the glossary.
Clawbacks
The plan sets out the window and the main rule: commission on cancelled or unpaid sales is offset against later commission and shown as a separate line on the statement. The detailed rules belong in an annex, because employers in Denmark cannot simply deduct an amount from salary. Our free commission clawback policy template has the clause text.
Statements and disputes
The plan gives reps a fixed route: a written objection to their manager within 30 days, a reply within 10 working days, then a decision by a named person. It is the best way of avoiding commission disputes before they become cases.
Changes
The plan applies for a period. If the agreement says quotas are set for each period, new quotas for a new period are generally not a change, as long as they do not differ materially from earlier ones. A material change during the period that leaves reps worse off must be notified individually with each rep's notice period under Danish rules.
How to use the template
- Fill in the key facts: roles, period, plan owner and who approved the plan.
- Choose basis and model: delete the options you do not use.
- Enter quotas and rates: per role in section 5 and per rep in appendix A.
- Write worked examples: with real numbers from your team, also at 50% and 150% attainment.
- Check against the agreements: the plan must not leave reps worse off than their contract or commission agreement.
- Delete the guidance: the italic notes are for you.
- Send the plan out before the period starts: and get the acknowledgement back from every rep.
Common mistakes in commission plans
- The plan arrives after the period has started, so reps work blind for the first month.
- Rates have no worked example, and tiers are read differently.
- Crediting and splits are not in the plan, so every shared deal turns into a negotiation.
- Clawback is mentioned in one word, with no window and no offset rule.
- Nobody knows who may approve an exception.
- The plan has been changed several times without a new version and without notice.
To go one step further back and design the model itself, see our guide to a fair and scalable commission model.
Prowi and commission plans
A plan only works if the calculation follows it every month. Prowi calculates commission continuously from CRM data according to the rules in your plan, reps see their earnings in a mobile app, and statements go through an approval flow before the amount is passed on to payroll. Adjustments and clawbacks are handled as rules. Book a demo to see your own plan set up.
FAQ
What is a commission plan?
A commission plan is the document that sets out the commission rules for a sales team for a period: who is covered, quotas, rates, accelerators, crediting, payout, clawbacks, statements and approvals.
What is the difference between a commission plan and a commission agreement?
The plan applies to the whole team for a period. The agreement is an annex to each rep's employment contract. Use both and make sure they say the same thing.
Does the rep have to sign the commission plan?
The template has an acknowledgement where the rep signs to confirm they received the plan. It documents that the plan was handed out. The terms must also be in the contract or a commission agreement.
When should the commission plan be sent out?
Before the period starts. Quotas and rates should be known before reps start working to them.
Is the commission plan template free?
Yes. You can download the Word file and use it freely. It is a starting point, not legal advice.
Sources
- Danish Employment Contracts Act (ansættelsesbevisloven), act no. 501 of 16/05/2023 (retsinformation.dk, in Danish), sections 3 and 5
- Danish Salaried Employees Act (funktionærloven), LBK no. 1002 of 24/08/2017 (retsinformation.dk, in Danish), section 2 on notice periods
This article is general information, not legal advice. Check your collective agreement and employment contracts.