Commission Structures Explained: Flat Rate vs Tiered vs Accelerators

Choosing a commission structure is one of the most consequential decisions a sales leader makes. Get it right and you create a system that rewards the behaviours you want, retains your best people, and aligns rep motivation with company growth. Get it wrong and you end up with sandbagging, gaming, or — worst of all — your top performers quietly updating their LinkedIn profiles.

The challenge is that there's no single "best" structure. Each one creates different incentives, carries different risks, and suits different business contexts. What works for an enterprise SaaS company with twelve-month sales cycles is completely wrong for a transactional team closing fifty deals a month.

This guide breaks down the five most common commission structures, explains how each one works with real GBP examples, and helps you decide which is right for your team.

1. Flat Rate (Linear) Commission

The simplest structure. Every pound of revenue earns the same commission rate, regardless of how much the rep has sold.

How It Works

A rep earns a fixed percentage on every deal. There's no quota threshold to hit before commission kicks in, and no bonus for exceeding target.

Worked example:

• Commission rate: 10%
• Rep closes £180,000 in Q1
• Commission earned: £18,000

If the same rep closes £90,000 the next quarter, they earn £9,000. The maths is always the same: revenue multiplied by rate.

Behavioural Impact

Flat rate structures produce consistent, steady effort. Reps know exactly what each deal is worth to them personally, which makes pipeline prioritisation straightforward. There's no incentive to time deals strategically — a deal closed in January is worth the same as one closed in March.

The downside is equally clear: there's no acceleration. A rep who hits 200% of target earns twice the commission but gets no premium for the exceptional performance. This means flat rate plans tend to retain mid-performers well but struggle to keep top performers engaged. Research from Xactly's annual benchmarking data consistently shows that top-performing reps — those above 120% attainment — are more likely to leave organisations with flat rate plans than those with accelerator-based structures.

When to Use It

Flat rate works best when:

• Your sales team is small (under ten reps) and you need simplicity
• Deal flow is relatively predictable and you want consistent cost modelling
• You're in an early-stage business where quotas are hard to set accurately
• The role is more account management than new business hunting

It's a poor fit when you need to drive aggressive growth or differentiate rewards between your best and average performers.

2. Tiered (Graduated) Commission

A tiered structure pays different rates depending on the rep's cumulative revenue in the period. As they sell more, they move into higher-earning tiers.

How It Works

You define revenue bands, each with its own commission rate. The rate steps up as the rep progresses through the tiers.

Worked example:

Revenue Band	Commission Rate
£0 - £50,000	6%
£50,001 - £100,000	8%
£100,001 - £150,000	10%
£150,001+	12%

A rep who closes £130,000 in the quarter earns:

• First £50,000 at 6% = £3,000
• Next £50,000 at 8% = £4,000
• Final £30,000 at 10% = £3,000
• Total commission: £10,000

Note the graduated calculation. The higher rate only applies to revenue within that band, not retroactively to all revenue. This is a common source of calculation errors — applying the top-tier rate to total revenue instead of using the graduated method.

Behavioural Impact

Tiered structures create natural momentum. As reps approach the next tier, the incremental value of each deal increases, which drives urgency. The structure rewards sustained performance across the period rather than a single large deal.

The risk is the opposite of acceleration: the early tiers can feel punishing. A rep who starts the quarter knowing they'll earn just 6% on their first £50,000 may feel underrewarded, particularly if they're used to a higher flat rate. This effect is most pronounced in the first weeks of each commission period when everyone resets to the bottom tier.

There's also a sandbagging risk at tier boundaries. A rep sitting at £49,000 near the end of a period might delay a deal to push it into the next period — starting their next quarter with immediate access to tier two revenue rather than just barely tipping into it now. Good plan design anticipates this by making tiers relative to quota rather than absolute revenue amounts.

When to Use It

Tiered structures work well when:

• You have clear, reliable quota-setting data
• You want to reward progressive achievement through the period
• Your average deal size is small enough that reps close multiple deals per period
• You need predictable commission costs at lower performance levels

They're less effective for enterprise teams where a single deal might jump a rep through multiple tiers.

3. Accelerators

Accelerators increase the commission rate once a rep exceeds a defined threshold — typically 100% of quota. The premium rate on deals above target rewards overperformance disproportionately.

How It Works

Below quota, the rep earns a base commission rate. Above quota, the rate increases — often significantly.

Worked example:

• Quarterly quota: £120,000
• Base rate (0-100% of quota): 8%
• Accelerator rate (100%+ of quota): 14%

A rep who closes £160,000:

• First £120,000 at 8% = £9,600
• Next £40,000 at 14% = £5,600
• Total commission: £15,200

Compare that to a flat 8% on £160,000, which would yield £12,800. The accelerator pays an additional £2,400 — a 19% premium for 33% overachievement. That asymmetry is the point.

Some plans use multiple accelerator tiers: one rate at 100-120% of quota, a higher rate at 120-150%, and an even higher rate above 150%. Each step increases the reward for sustained overperformance.

Behavioural Impact

Accelerators are the single most powerful tool for retaining top performers. A rep earning double the commission rate on every deal above quota has an enormous financial incentive to keep pushing. Research from the Sales Management Association found that organisations using accelerator-based plans had 18% lower voluntary turnover among their top quartile performers compared to those without.

The behavioural effect is particularly strong as reps approach the quota threshold. A rep at 95% of quota will work intensely to close that next deal, because every pound above 100% is worth nearly twice as much.

The downside is cost volatility. In a strong quarter, accelerated commissions can significantly exceed budget. A single rep hitting 200% of quota might earn more in commission than two reps who each hit 100%. Finance teams need to model the upside scenarios carefully.

There's also a well-documented sandbagging problem. If the accelerator resets quarterly, a rep who's already well above quota might hold deals to start the next quarter strong. The classic pattern: a rep at 140% of quota in March suddenly has a "slow" last two weeks, then opens April with a burst of closes.

When to Use It

Accelerators are the right choice when:

• You have a clear, accurate quota-setting process
• Retaining top performers is a strategic priority
• Your business benefits disproportionately from above-quota performance
• You can tolerate some cost variability in exchange for revenue upside

They're essential for any team where you're competing for talent against companies that already offer accelerators — which, in UK SaaS sales, is most of them.

4. Decelerators

Decelerators reduce the commission rate below a certain attainment threshold. They're the mirror image of accelerators: instead of rewarding overperformance, they penalise underperformance.

How It Works

A rep earns the full commission rate only when they're at or above a minimum attainment level. Below that threshold, the rate decreases.

Worked example:

• Quarterly quota: £100,000
• Standard rate (80-100% of quota): 10%
• Decelerated rate (below 80%): 5%

A rep who closes £70,000:

• All £70,000 at the decelerated 5% rate = £3,500
• Compare to the standard 10% rate: £7,000
• The rep earns half the commission for 70% of quota

Some plans use deceleration as a cliff: below 60% attainment, the rate drops to zero. This effectively creates a minimum performance threshold. Others use a sliding scale where the rate gradually increases as the rep approaches quota.

Behavioural Impact

Decelerators are controversial. The intent is to create urgency — reps know that falling below the threshold costs them disproportionately, which should motivate consistent effort throughout the period.

In practice, the behavioural effects are mixed. For reps who are close to the threshold, deceleration does drive urgency. But for reps who fall significantly below it early in the period, deceleration can have the opposite effect. If a rep is at 30% attainment halfway through the quarter, they can see that reaching 80% is unlikely. The decelerated rate means they're earning very little on each deal. Rational economic behaviour suggests they should start job-hunting rather than pushing to close a few more underrewarded deals.

This is the "give-up" problem, and it's the primary risk of deceleration. The reps you most need to motivate — the ones who are struggling — are the ones most likely to disengage under a decelerated plan.

When to Use It

Use decelerators cautiously, and typically in combination with accelerators rather than on their own:

• When you need a minimum performance standard for the role
• In large teams where carrying persistent underperformers has a high cost
• When paired with strong accelerators that offset the psychological impact
• In mature sales organisations with accurate quotas and reliable territories

Avoid them in early-stage teams, turnaround situations, or any context where quotas might be set inaccurately. A decelerator amplifies quota-setting mistakes — if the quota is too high, even strong performers get penalised.

5. Draw Against Commission

A draw is an advance payment against future commission earnings. It provides income stability for reps during ramp-up periods or in roles with long sales cycles.

How It Works

The rep receives a guaranteed monthly payment — the draw. As they earn commission, it offsets the draw. Once commission exceeds the draw, the rep keeps the difference.

Worked example:

• Monthly draw: £3,000
• Month 1 commission earned: £1,800
• Month 1 payout: £3,000 (the draw), with £1,200 carried forward as unrecovered draw
• Month 2 commission earned: £4,500
• Month 2 calculation: £4,500 minus £1,200 unrecovered = £3,300
• Month 2 payout: £3,300

Recoverable vs non-recoverable draws:

A recoverable draw means the rep owes back any unrecovered amount if they leave or if the draw period ends. A non-recoverable draw is essentially a guaranteed minimum — the rep keeps it regardless.

Non-recoverable draws are more common during onboarding (typically three to six months) as a way to bridge the gap while a new rep builds pipeline. Recoverable draws are used for ongoing roles with lumpy revenue patterns.

Under UK employment law, recovering a draw from a departing employee requires clear contractual terms established at the outset. ACAS recommends that draw arrangements be documented in writing with explicit recovery provisions. Without this, recovering the amount becomes difficult — and potentially gives rise to an unlawful deduction from wages claim under the Employment Rights Act 1996.

Behavioural Impact

Draws reduce the anxiety associated with variable pay, which can improve retention during the critical first months of employment. A rep who isn't worried about paying rent is more likely to focus on building proper pipeline rather than chasing low-quality quick wins.

The risk is complacency. A rep on a generous non-recoverable draw has less urgency than one whose income depends entirely on performance. This is why most companies limit draws to defined periods — typically three to six months for new hires — rather than using them as a permanent structure.

When to Use It

Draws are appropriate when:

• Onboarding new reps who need time to build pipeline
• The sales cycle is long enough that a new rep won't close anything for several months
• You're entering a new market where quota achievement is genuinely uncertain
• You need to compete for candidates against companies offering higher base salaries

Combining Structures

In practice, most UK sales teams use a combination of structures rather than a single model. The most common hybrid is a tiered plan with accelerators: graduated rates up to quota, then an accelerated rate above it.

Worked example — tiered with accelerator:

Attainment	Commission Rate
0-80% of quota	6%
80-100% of quota	10%
100-120% of quota	14%
120%+ of quota	18%

For a rep with a £100,000 quarterly quota who closes £135,000:

• First £80,000 at 6% = £4,800
• Next £20,000 at 10% = £2,000
• Next £20,000 at 14% = £2,800
• Final £15,000 at 18% = £2,700
• Total commission: £12,300

This structure does three things simultaneously: it controls costs at low attainment (6% base tier), rewards quota achievement (10% tier), and creates strong retention incentives for top performers (14% and 18% tiers).

Another common combination is flat rate with SPIFs (Sales Performance Incentive Funds). The base plan stays simple, and you layer short-term incentives on top for specific behaviours — selling a new product, closing multi-year contracts, or winning back churned accounts.

Research on Commission Structure Effectiveness

Accelerators drive top-performer retention. Multiple studies, including research published in the Journal of Marketing Research, have found that convex compensation functions (where marginal earnings increase with performance) are significantly more effective at retaining high performers than linear or concave functions.

Simplicity correlates with performance. Research from Gartner found that sales reps who fully understood their commission plan were 27% more likely to hit quota than those who didn't. This doesn't mean the structure must be simple in absolute terms — it means it must be simple enough for every rep to calculate their expected earnings on any given deal.

Frequent resets reduce motivation. Monthly commission periods with monthly resets create more urgency but also more "give-up" moments. Quarterly periods tend to produce better sustained effort, though the optimal period length depends on deal velocity.

Common Mistakes in Structure Design

Choosing complexity over clarity. A plan with five tiers, two accelerator levels, product multipliers, and a quarterly kicker might be mathematically elegant, but if reps can't work out what a deal is worth to them in thirty seconds, the incentive effect is lost. The best structures are ones that reps can explain to each other over lunch.

Ignoring the OTE implications. The commission structure determines how variable the variable pay actually is. A flat rate plan with a 50/50 base-to-OTE split creates modest variability. The same split with aggressive accelerators creates enormous variability — a top performer might earn 80% more than their OTE while an underperformer earns 30% less. Model the full range of outcomes before committing to a structure.

Setting thresholds without data. Accelerator thresholds and tier boundaries should be based on historical attainment distributions, not intuition. If your accelerator kicks in at 100% of quota but only 20% of reps hit quota last year, you've built a plan that rewards a small minority and demotivates the majority. The threshold should be achievable by 60-70% of the team.

Forgetting the cost of administration. Every tier, threshold, and conditional rate adds operational complexity. Somebody has to calculate it, validate it, and explain it when reps query their statements. If your commission process runs on spreadsheets, a complex structure dramatically increases the risk of calculation errors. Keep the structure as simple as your business objectives allow.

Not modelling edge cases. What happens if a rep closes one enormous deal that represents 300% of quota? What if nobody hits the first tier? Model the extremes, not just the median scenario. You'll often discover that your structure produces absurd outcomes at the edges — and those are the scenarios that actually occur.

UK-Specific Considerations

Several factors are unique to UK commission planning:

PAYE treatment. Commission payments are subject to PAYE and National Insurance, collected through payroll in the period they're paid. This means the tax treatment of lumpy commission payments can push reps into higher tax bands in high-earning months, even if their annual income wouldn't warrant it. This is a common source of frustration and worth addressing proactively in your plan documentation.

Employer NIC. Since April 2025, the employer NIC rate stands at 15% with a threshold of £5,000. Every pound of commission costs the employer an additional 15p in NIC. For a team of ten reps each earning £30,000 in annual commission, that's £45,000 in employer NIC — a cost that often isn't factored into commission budget modelling.

Employment contract implications. If commission terms are set out in the contract of employment (or have become an implied term through custom and practice), changing the structure requires consultation and agreement. Unilateral changes can constitute a breach of contract. Many UK sales leaders now keep commission plans in a separate, referenced policy document that's explicitly subject to periodic review — giving more flexibility to adjust the structure.

Working Time Regulations. For reps on commission-only or heavily commission-weighted plans, the employer must ensure that total earnings don't fall below the National Minimum Wage (currently £12.21 per hour for workers aged 21 and over). This is calculated across the pay reference period. A draw or guaranteed minimum can help manage this requirement.

Choosing the Right Structure for Your Business

There's no universal answer, but there are useful heuristics:

• Early stage, small team, uncertain quotas: Start with a flat rate. Add complexity later when you have data to support it.
• Growth stage, quota-carrying reps, competitive talent market: Tiered with accelerators. This is the default for a reason — it balances cost control with top-performer retention.
• Enterprise sales, long cycles, large deal sizes: Flat rate or simple tiered with a generous draw during ramp. Avoid structures that create volatility on individual large deals.
• High-velocity transactional sales: Tiered with monthly or quarterly resets. The short cycle suits frequent tier progression.

Whatever structure you choose, test it. Model it against last year's data. Calculate the payout for your best rep, your worst rep, and your median rep. Show it to a couple of trusted team members and ask them to explain it back to you. If they can't, simplify it.

The right commission structure isn't the most sophisticated one — it's the one your team understands, trusts, and responds to.