The Early-Stage Sales Comp Ramp
Pay 50/50, give away 100% of quarter-one bookings, then hold reps to closing 3-5x their take-home.
- Difficulty
- Moderate
- Time to result
- ~months to results
- Steps
- 5
- Confidence
- 91%
Founders panic about a rep's on-target earnings headline number when the only question that matters is whether a rep closes more than they take home. Lemkin's plan pays market at a 50/50 base/bonus split, lets the rep keep 100% of what they close in their first quarter so they can eat and put points on the board, then holds them to a 3-5x close-to-comp ratio thereafter. Once architected, the plan should not need revisiting for years — and a rep making a fortune is the goal, not a problem.
Origin
Jason Lemkin's comp plan from EchoSign onwards, which he says he has used essentially unchanged for many years, reinforced by his first-ever angel investment in Pipedrive, where the first sales rep out-earned the founders within three months.
Core principles
- 01The only metric that matters early: can the rep close more than they take home?
- 02Standard structure is 50% base / 50% variable, so the cash you actually commit is half the scary OTE number.
- 03Ramp: keep 100% of what you close in quarter one. It is unprofitable and it is an investment.
- 04Steady state: 3x take-home for SMB, 4x for mid-market, 5x for enterprise.
- 05Negotiating an OTE from $150K down to $130K is noise; whether they close $600K is signal.
- 06You want your reps rich. Concentrate leads on the best closers.
- 07Do not tweak the plan constantly — too many tweaks means you are plugging a leaky boat.
How to run it
- 1
Pay market and compute the real cash commitment
If a rep wants $140-150K OTE, that is a ~$70-75K base at 50/50 — roughly $6K a month. Over a two-to-three month experiment you are committing about $20K to find out whether sales works.
Pro tip Reframe it for yourself: 'if you can't find $20,000 to test sales, don't do sales.'
Watch out Do not let the headline OTE number scare you into underpaying and hiring a weak rep.
- 2
Give quarter one at 100% commission, quota 1x
For the first three months, the rep keeps 100% of what they close, and their quota is roughly 1x their take-home rather than 5x. Let them eat, let them put points on the board, take the pressure off.
Pro tip A new rep is lucky to close as much as their OTE in the first three months anyway; this simply makes that survivable and motivating.
Watch out Cap the ramp at one quarter maximum. Run it longer and mediocre reps lean into the easy money, which helps neither of you.
- 3
Set the steady-state multiple by segment
After the ramp, the rep must bring in 3-5x their take-home: 3x for SMB, 4x for mid-market, 5x for enterprise. The more enterprise you are, the higher both the comp and the required multiple.
Pro tip A rep on $150K closing $450K is accretive as long as your marketing costs are sane — and if they aren't, that's marketing's problem, not sales'.
Watch out Where the model breaks is many reps not closing plus very high marketing costs — that is when CAC and payback blow up.
- 4
Concentrate leads on your best closers
Early on, two reps each closing $2M beats twenty reps each struggling to close $100K. Route your scarce leads to whoever converts, while bringing new people up behind them.
Pro tip Capacity planning ('I need 100 reps at $500K each to add $50M') is real — but only once you are big. Applying it early is a rookie error.
Watch out Twenty struggling reps means no domain knowledge, a miserable culture and constant infighting.
- 5
Let them get rich and stop tweaking
If the plan is architected correctly, a rep taking home hundreds of thousands means you are making money and your equity is worth more. Leave the plan alone — good ones run for years with only marginal tweaks.
Watch out Founders who resent a rep out-earning them tend to break the plan, and then break the sales team.
In the wild
Lemkin's first-ever investment was Pipedrive (SMB CRM, later sold for ~$1.5B), then ~$2M in revenue and 100% self-serve with no sales rep. He installed a rep who reverse-sorted the self-serve customer base by seat count and simply called down the list — phoning AOL, which had 20 seats, and asking if they wanted more. AOL took 100. The rep kept ~20% of the incremental deals.
→ He made hundreds of thousands of dollars while the founders were paying themselves ~$50K — and they were furious. Lemkin's verdict: keeping 20% of the extra 80 seats at AOL is a great deal for the company. This is exactly what you want.
A bootstrapped founder making $60K panics at a rep asking $140K OTE. Broken down: $70K base is ~$6K/month, so a two-to-three month test costs about $20,000 in cash.
→ The decision reframes from 'can I afford a $140K salary?' to 'can I fund a $20K experiment?' — a question with an obvious answer.
Common mistakes
Fixating on the OTE headline number
Founders negotiate an OTE from $150K to $130K and feel clever. That $20K is irrelevant next to whether the rep closes $600K or nothing. Optimise the multiple, not the salary.
Running the 100% ramp too long
Past one quarter, an easy plan lets mediocre reps coast. It does not help the company, and it does not help them find a role where they'd actually succeed.
Resenting a rep who makes a lot of money
A rep taking home a lot, under a properly architected plan, means you are taking home a lot and your equity is worth a lot. The Pipedrive founders' anger was the wrong instinct.
Is it for you?
Best for
Founders designing comp and quota for their first one to five sales reps in B2B SaaS
Not ideal for
Large, mature, profitable sales orgs where comp must be tuned carefully against margin and capacity plans
From the transcript
“your first three months you you keep 100% of what you close”
“first of all let's be tactical it's usually 50/50 right 50% base 50% bonus for a sales rep”
“ultim ultimately a sales rep's got to bring in four to five times what they take home”
“don't make them close 5x they take on their first quarter make them close 1X”
“I just view it as a simple ramp you could do I think you do it for one quarter Max one quarter”
From the episode
Building a world-class sales org
Jason Lemkin (SaaStr)