Playbook · Compensation

How to design a Series A sales comp plan

A Series A comp plan has to do three jobs at once: attract talent above the founder-led pay grade, drive the right behaviour against the new growth plan, and stay affordable inside the cash runway. This playbook walks a CEO and CFO through the seven steps to a working plan.

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Audience

Founder / CEO, Revenue leader, Board / investor

Time on task

Three to four weeks

Context

Written by Rich Evans from advisory work with Series A and growth-stage SaaS, FinTech and B2B services businesses. Comp design is the highest-leverage operating decision a leadership team makes in the first year of a Series A. Get it wrong and the consequences compound for eight quarters.

Before you start

▸Board-approved Series A revenue plan with quarterly milestones
▸Current cost of sales as a percentage of new ARR
▸Cash runway and burn plan from the CFO
▸Current rep tenure, attainment and OTE benchmarks

What you will have at the end

▸A written Series A comp plan covering base, variable, accelerators, decelerators, ramp protection and SPIFs
▸A modelled cost of sales at fifty, eighty and one hundred per cent attainment scenarios
▸An SDR comp plan aligned to the AE plan
▸An agreed governance cadence for in-quarter changes and exception handling

Jump to a step (7)+

01Step one: anchor the plan to the Series A growth model
02Step two: set the OTE bands by role and seniority
03Step three: design the variable mechanic
04Step four: install ramp protection
05Step five: design the SDR comp plan
06Step six: model the cost of sales scenarios
07Step seven: launch with governance, not surprises

The steps.

Step 01Two to three days · CEO with CFO and revenue leader

Step one: anchor the plan to the Series A growth model

The plan exists to fund the Series A growth model. Start with the modelled new ARR, segment mix and target sales cycle. The comp plan is a translation layer between the growth model and rep behaviour.

Checklist

☐Confirm the Series A new ARR target by quarter and segment.
☐Map the target ARR to the headcount plan: AEs, SDRs, sales engineers.
☐Confirm the target cost of sales as a percentage of new ARR.
☐Document the assumptions everyone is designing against.

Failure mode this step prevents

Designing the comp plan against last year's results. The plan funds the past, not the funded growth model.

Step 02Two to three days · CEO with revenue leader

Step two: set the OTE bands by role and seniority

OTE bands are a market exercise. Anchor to live data from the regions you are recruiting in. For Yorkshire and the North West, sit on or just above the Northern benchmark; below the benchmark and you cannot hire, twenty per cent above and you compress your hiring envelope.

Checklist

☐Source live OTE benchmarks for AE, senior AE, SDR and sales manager.
☐Set OTE per role at the benchmark or modestly above it.
☐Decide the base-to-variable split: 50/50 for AE, 70/30 for SDR is the default for SaaS Series A.
☐Document the bands in the plan footer with a refresh date.

Failure mode this step prevents

Setting OTE on gut feel rather than market data. Overpaying compresses the cap table; underpaying loses every shortlist.

Step 03Three to five days · Revenue leader with CFO

Step three: design the variable mechanic

A clean Series A AE plan pays straight commission on new ARR with an accelerator above one hundred per cent of quota and a decelerator below seventy. Multipliers, kickers and exotic mechanics introduce noise; resist them in year one.

Checklist

☐Define commission percentage on new ARR up to one hundred per cent of quota.
☐Define accelerator above one hundred per cent of quota; common range is 1.3 to 1.8 times.
☐Define a decelerator below seventy per cent of quota or a cliff at fifty per cent.
☐Confirm the plan year and whether the accelerator resets quarterly or annually.

Failure mode this step prevents

Stacking three or four mechanics into the plan. Reps stop optimising and start gaming.

Step 04Two days · Revenue leader with CFO

Step four: install ramp protection

A new AE who lands their full quota in month one is a unicorn. A new AE who lands zero variable in month one is a leaver by month three. Ramp protection is the bridge between hire date and steady-state attainment.

Checklist

☐Define the ramp period: typically three to six months for SaaS, longer for industrial.
☐Pay variable at a stepped percentage: month one fifty per cent, month two seventy-five, month three full plan.
☐Document the start-date trigger: contract signed, not desk landed.
☐Cap ramp protection at the agreed total cost; do not let it open-end.

Failure mode this step prevents

Skipping ramp protection to save short-term cost. The result is a six-figure attrition cost and a brand-damage problem in the local market.

Step 05Two to three days · Revenue leader

Step five: design the SDR comp plan

The SDR plan must drive the right meetings, not the right activity. A pure activity-based plan compresses pipeline quality; a pure outcome-based plan exposes a junior team to forecast volatility. Series A default is meetings-held weighted by qualified-pipeline-progressed.

Checklist

☐Set the SDR base inside the regional benchmark; do not under-base SDRs out of the market.
☐Pay variable on meetings held that progress to qualified opportunity.
☐Add a quarterly accelerator on pipeline created above target.
☐Avoid pure activity metrics (calls made, emails sent) in the variable.

Failure mode this step prevents

Paying SDRs purely on activity. Inboxes fill, qualified pipeline does not.

Step 06Two to three days · CFO with revenue leader

Step six: model the cost of sales scenarios

Before the plan is signed, model cost of sales at fifty, eighty and one hundred per cent attainment scenarios. Sign the plan only if every scenario lands inside the agreed cost-of-sales envelope.

Checklist

☐Build a cost-of-sales sheet with rep headcount, base, variable and ramp.
☐Model fifty, eighty and one hundred per cent attainment.
☐Confirm the worst case (low attainment, high cost) is still affordable inside the runway.
☐Get the model signed by the CFO and the chair before plan launch.

Failure mode this step prevents

Signing the plan against best-case attainment only. The first miss creates a cash crisis the comp plan caused.

Step 07One to two weeks · Revenue leader with CEO

Step seven: launch with governance, not surprises

A comp plan launched by email gets ignored. A comp plan walked through one-to-one with each rep, with a written FAQ, and a named exception-handling owner, gets adopted. Plan the launch as a project, not a memo.

Checklist

☐Walk every rep through their plan in a one-to-one before the comp year starts.
☐Publish a written FAQ covering the common questions in advance.
☐Name a single exception-handling owner; usually the revenue leader, never the CEO.
☐Commit in writing not to change the plan inside the first two quarters except by board exception.

Failure mode this step prevents

Tweaking the plan in quarter two to fix a perceived loophole. The team learns the plan is not credible and starts hedging.

Common questions.

What is a typical accelerator in a Series A SaaS comp plan?

1.3 to 1.8 times the standard commission rate above one hundred per cent of quota. Below 1.3 the plan does not reward over-attainment; above 1.8 the plan tilts cost-of-sales heavily and is hard to defend to the board.

Should the CRO or VP Sales be on the same comp plan mechanic as the AE team?

Same mechanic, different mix. CRO and VP Sales typically run on a 60/40 base-to-variable split with the variable paid against team attainment plus one or two strategic outcomes (NRR, segment expansion).

How often should the Series A comp plan be revisited?

Annually as a default, with a structured mid-year review only if the growth model materially shifts. Frequent in-year tweaks erode trust and drive defensive behaviour.

What share of the comp plan should be paid in equity rather than cash?

For senior commercial leadership, equity meaningful enough to matter at exit; typically 0.5 to 2 per cent for a CRO-equivalent at Series A. AE-level equity should be present but small; cash drives short-cycle behaviour, equity drives retention.

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