Worked example
Ten reps, each with a $60,000 variable target on an $800,000 quota, a 1.5× accelerator above quota, a cap at 2× target, and attainment averaging 95% with a 20-point spread.
| Input | Value |
|---|---|
| Number of quota-carrying reps | 10 |
| Variable target per rep | $60,000.00 |
| Quota per rep | $800,000.00 |
| Accelerator multiplier above quota | 1.5 |
| Cap, as a multiple of the variable target | 2 |
| Average attainment | 95% |
| Spread (standard deviation, points) | 20% |
| Random seed | 42 |
| Result | Value |
|---|---|
| Expected total variable payout | $484,005.00 |
| Budget at 100% (headcount × target) | $600,000.00 |
| Expected minus budget at 100% | -$115,995.00 |
| Variable cost of sales | 7.53% |
| Simulated team revenue | $6,428,640.00 |
| P10 individual payout | $33,324.00 |
| P50 (median) individual payout | $49,044.00 |
| P90 individual payout | $55,962.00 |
- Budget at 100%: headcount × variable target: $600,000.00
- Flat rate: target ÷ quota: 7.5%
- Simulated team revenue: $6,428,640.00
- Sum of simulated individual payouts: $484,005.00
- Expected − budget at 100%: -$115,995.00
- Cost of sales: payout ÷ revenue: 7.53%
How the budget is calculated
Budget at 100% = headcount × variable target
Flat rate = variable target ÷ quota
Expected payout = Σ payout(rep attainment) over the simulated team
Each simulated rep receives an attainment drawn from a normal distribution with your average and spread. Their revenue is quota × attainment, and their payout is computed by the same engine as the commission calculator: flat rate, then the accelerator on revenue above quota, then the cap.
The draw uses a fixed seed, so the same inputs always give the same team. Changing the seed shows how sensitive the budget is to luck when the team is small.
Reading the results
- Expected minus budget is the gap your finance team should plan for. A positive gap usually comes from accelerators paid to over-achievers; a negative one from reps below quota.
- P10, P50, P90 are the payouts at the 10th, 50th and 90th percentile of the team (nearest-rank method). A wide gap between P10 and P90 means pay depends heavily on attainment.
- Cost of sales relates the expected payout to simulated revenue, so you can compare plan designs on the same basis.
To compare two plan designs on the same team, use the commission plan simulator.
Limitations
- Every rep shares the same quota and target; ramping reps and mixed roles are not modelled.
- A normal distribution is a simplification. Real attainment is often skewed, so test several averages and spreads.
- The average and spread are your assumptions. We do not supply attainment benchmarks.
Frequently asked questions
Why is the expected payout different from headcount × target?
Because the plan is not linear. Reps above quota earn the accelerated rate, capped reps stop earning, and reps below quota earn less than target. The sum of individual payouts reflects all three effects.
What spread should I use?
Use the standard deviation of attainment from your own past periods if you have it. If not, run the calculator with a few values to see how much the budget depends on it, rather than relying on a single guess.
Why does changing the seed change the result?
The seed controls the random draw of the simulated team. With few reps, one lucky or unlucky draw moves the total noticeably. The variation between seeds is a useful reminder of how uncertain a small-team budget is.