Worked example
Top-down: a $10M revenue target, 20 quota-carrying reps and 15% over-assignment. Switch to bottom-up for $60,000 of variable at a 10% target rate, cross-checked with a 4× multiple on a $60,000 base.
| Input | Value |
|---|---|
| Method | Top-down (from the revenue target) |
| Company revenue target | $10,000,000.00 |
| Quota-carrying reps | 20 |
| Over-assignment | 15% |
| Annual variable at target | $60,000.00 |
| Target commission rate | 10% |
| Quota-to-OTE multiple | 4 |
| Annual base salary | $60,000.00 |
| Result | Value |
|---|---|
| Quota per rep | $575,000.00 |
| Total quota assigned | $11,500,000.00 |
| Quota from OTE multiple | $0.00 |
| OTE (base + variable) | $0.00 |
- Revenue target: $10,000,000.00
- × (1 + over-assignment): 15%
- = Total quota assigned: $11,500,000.00
- ÷ Quota-carrying reps: 20
- = Quota per rep: $575,000.00
The two formulas
Top-down quota per rep = revenue target × (1 + over-assignment) ÷ quota-carrying reps
Bottom-up quota = variable at target ÷ target commission rate
Bottom-up quota (multiple) = quota-to-OTE multiple × (base salary + variable at target)
Top-down starts from the company number. Over-assignment adds a buffer so that the target can still be met when some reps fall short; the total assigned is larger than the target by exactly that percentage.
Bottom-up starts from the plan. If a rep is meant to earn their variable by closing quota at the target rate, quota has to equal variable divided by rate. The multiple is a second view of the same question, expressed against total pay.
Reconciling the two views
Run both methods. If the top-down quota is far above the bottom-up quota, either reps will need a lower rate than planned to stay within budget, or the revenue plan needs more headcount. Compare the total assigned with the output of the sales capacity calculator to check that the team can actually carry it.
For the rate side of the equation, see the commission rate calculator; for the pay side, the OTE calculator.
Limitations
- Top-down splits the target evenly; territories with different potential usually deserve different quotas.
- Ramping reps should carry a reduced quota; model them with the sales ramp calculator.
- We do not publish benchmark over-assignment percentages or quota-to-OTE multiples; they depend on your margins and history.
Frequently asked questions
What is quota over-assignment?
Over-assignment means the sum of individual quotas is set above the company target. If the target is $10M and over-assignment is 15%, reps collectively carry $11.5M, which leaves room for some to miss without the company missing.
Why divide variable pay by the commission rate?
At target, commission earned equals quota times rate. Setting that equal to the variable at target gives quota = variable ÷ rate. A $60,000 variable at 10% therefore implies a $600,000 quota.
Should quota be annual, quarterly or monthly?
Use the same period for every input. The formulas work for any period as long as the target, variable and base all cover it.
What if the two bottom-up methods disagree?
It means your commission rate and your quota-to-OTE multiple are not consistent with each other. Decide which constraint matters more, usually cost of sales, and adjust the other.