New SaaS Startup: How to Design a Reasonable Sales Commission Structure
This article focuses on the commission structure design issues of a SaaS startup, analyzing commission rate settings under different contract terms (one-year, monthly payment, three-year) and payment methods (prepaid, annual payment), and discusses the dual role of sales managers and considerations for channel commissions.


The company's core product is a SaaS-based solution. Ideally, customers are expected to sign at least a one-year contract, but to close deals, monthly subscriptions are also accepted during the early growth phase. The maximum contract term is three years. Against this background, the following seeks advice on fair compensation plans under different contract scenarios:
1. One-year contract with full upfront payment
My initial idea is that the sales representative receives a commission of "X"% after the invoice is issued. However, I am unsure what a reasonable range for "X" would be.
2. Monthly subscription contract
I think the handling is similar to the first case, except that the commission is paid monthly.
3. Three-year contract with annual payments
I think the commission structure can follow the first case, but the percentage "X" should be appropriately higher to incentivize sales representatives to pursue long-term contracts.
4. Three-year contract with full upfront payment
I am less certain about this case. Because the sales representative may leave during the contract term, and others will manage the account afterward, while the departing representative has already received the full commission, which is unfair to the subsequent manager.
5. Sales manager's commission plan
The sales manager simultaneously handles personal sales targets and team management responsibilities. How should the commission structure be designed?
6. Channel commissions
For the same SaaS solution, how should commissions for channel partners be set?
I greatly appreciate any feedback, or if you could recommend relevant websites or resources, I would be very grateful.