Worked example
A 3-year contract at $60,000 ACV, paid 10% on first-year ACV plus a 3% kicker on years two and three, with $12,000 of expansion ARR at 8% and a 3% renewal rate shown for reference.
| Input | Value |
|---|---|
| Annual contract value (ACV) | $60,000.00 |
| Contract length (years) | 3 |
| Commission rate on first-year ACV | 10% |
| Multi-year kicker rate | 3% |
| Expansion ARR | $12,000.00 |
| Commission rate on expansion ARR | 8% |
| Commission rate on renewals | 3% |
| Result | Value |
|---|---|
| Total commission | $10,560.00 |
| First-year commission | $6,000.00 |
| Multi-year kicker | $3,600.00 |
| Commission on the new contract | $9,600.00 |
| Total contract value (TCV) | $180,000.00 |
| Effective rate on TCV | 5.33% |
| Expansion commission | $960.00 |
| Renewal commission per year (same ACV) | $1,800.00 |
- First-year commission: ACV × base rate: $6,000.00
- Multi-year kicker: ACV × 2 extra year(s) × kicker rate: $3,600.00
- = Commission on the new contract: $9,600.00
- TCV: ACV × years: $180,000.00
- Effective rate: contract commission ÷ TCV: 5.33%
- + Expansion: expansion ARR × expansion rate: $960.00
- = Total commission: $10,560.00
Formulas
First-year commission = ACV × base rate
Multi-year kicker = ACV × (contract years − 1) × kicker rate
Effective rate on TCV = (first-year + kicker) ÷ (ACV × contract years)
Expansion commission = expansion ARR × expansion rate
Total = first-year + kicker + expansion
The effective rate on TCV shows the cost of the new contract per dollar committed. A longer term with a small kicker lowers it, because the extra years add more contract value than commission. Expansion is kept out of that ratio because it is a separate sale with its own value.
Definitions used here
- ACV — the recurring value of one contract year, excluding one-time fees. If your first year includes a ramp or a discount, enter the first-year figure your plan pays on.
- Kicker — an extra rate on committed years beyond the first, to reward multi-year terms without paying the full rate on every year.
- Renewal — commission on a contract that renews at the end of its term. It is shown per renewal year at the same ACV and excluded from the total because it has not happened yet.
Limitations
- Flat rates only. If attainment-based accelerators apply on top, run the result through the accelerator calculator.
- Payment timing (upfront vs on invoice) is not modelled; neither is the accounting treatment of commission cost, which is not covered by this page and is not accounting advice.
- Early cancellation is handled separately in the commission clawback calculator.
- We do not publish typical SaaS commission rates: we have no sourced benchmark data.
Frequently asked questions
Is SaaS commission paid on ACV or TCV?
Plans do both. Paying on first-year ACV keeps cost tied to recurring value; paying on TCV rewards long commitments but front-loads cost. A kicker on additional years is a middle ground, and this calculator shows the resulting effective rate on TCV.
How is a multi-year kicker calculated?
Multiply the ACV by the number of committed years after the first and by the kicker rate. A 3-year deal at $60,000 ACV with a 3% kicker adds 60,000 × 2 × 3% = $3,600.
Should expansion be paid at the same rate as new business?
That depends on how much effort expansion takes in your motion and who owns it. The calculator lets you set a separate rate so you can compare both choices.
Why is the renewal commission not in the total?
Because the renewal has not been signed. It is shown so you can see what a renewal would add, without inflating the value of today’s deal.