IT Companies

The IT industry is one of the most commission-driven sectors. With US IT spending exceeding $1.5 trillion annually and hundreds of thousands of salespeople, account managers, and solution sellers, variable compensation is the foundation for industry growth. From hardware distribution to cloud services, commission models vary significantly.

This page explains how commission structures work in IT, which roles earn commission, and how effective commission administration can handle the industry's complexity.

Commission Models in IT

IT companies use different commission models depending on product type:

Software and Licenses

License Type	Typical Commission
Perpetual licenses	5-15% of license value
SaaS/Subscription (new)	8-15% of first-year ARR
SaaS renewal	2-5% of ARR
Expansion/upsell	5-10% of increased ARR

Hardware

Hardware sales typically yield lower percentage commission at 2-8% of sale price, but can produce high absolute amounts on large deals. Margin-based commission at 15-30% of gross profit is also common.

IT Services and Projects

Commission on implementation projects and managed services. Typically 3-8% of project value for new projects and 1-3% of ongoing contracts.

Roles with Commission

Account Executives (AE): Primary sales role with OTE of $100,000-200,000. Enterprise AEs can reach $250,000-400,000. Typical 50/50 split between base and variable.

Sales Development Reps (SDR): Focus on lead generation and qualification. OTE of $60,000-80,000 with 30-40% variable. Commission per qualified meeting ($50-100) or pipeline generated.

Channel Managers: Work with partners and resellers. OTE of $90,000-150,000. Commission based on partner sales, typically 1-3% of partner revenue.

Customer Success Managers: Increasingly incentivized on expansion and renewal. OTE of $75,000-120,000 with 15-30% variable based on net revenue retention.

Solutions Engineers/Pre-sales: Technical sellers supporting the sales process. Often receive 15-30% of AE's commission on deals they participate in.

Complex Commission Structures

The IT industry has several unique elements:

• Multi-year deals: Commission on multi-year contracts can be paid upfront, spread over the years, or as a combination.
• Recurring revenue: SaaS companies reward differently for new customers vs. renewal and expansion.
• Tiered structures: Progressively higher rates for overperformance. Typical 1.5-2x accelerator above quota.
• Clawbacks: Commission returned for churn within typically 12 months for SaaS.

Bonus Structures

Quarterly bonuses: Many IT companies operate with quarterly targets and bonuses beyond ongoing commission.

SPIFs: Time-limited incentives for priority products or target segments. Example: Double commission on security solutions in Q4.

President's Club: Exclusive recognition and trips for top 5-10% performers. Criteria typically 120%+ quota attainment.

FAQ: Commission in the IT Industry

What does an IT salesperson earn?

OTE varies significantly. SMB sellers: $70,000-100,000. Mid-market: $100,000-150,000. Enterprise: $150,000-400,000. Highest compensation is in SaaS and cloud.

When is commission paid?

Typically monthly with a one-month delay. Some companies pay at booking, others at invoicing or collection.

How is commission handled on SaaS renewals?

Practices vary. Some give full commission to AE, others to CSM, and some split. Renewal commission is typically 2-5% of ARR vs. 8-15% on new business.

Do I lose commission if the customer churns?

Yes, most SaaS companies have clawbacks. Typically 100% is returned for churn within 3 months, 50% within 6 months, and gradually less thereafter.