Comp plan cost model
Finance usually asks what the plan costs if the team crushes it, and nobody asks what it costs per dollar if the team misses. Base pay is fixed, so a miss is the expensive year per booking dollar, even with accelerators on the upside. This model builds total comp cost by role at three attainment levels and shows cost of sales as a percent of bookings, including the marginal cost of the upside.
Download it
What you get
- A headcount and plan inputs table for AEs, SDRs, and a manager
- Variable pay by role at 80%, 100%, and 120% team attainment
- Total comp cost, including an employer burden line, at each level
- Cost of sales as a percent of bookings with every formula written out
- The marginal cost of bookings between 100% and 120%
Who it's for
- Finance partners approving next year's comp budget
- RevOps leads building the annual plan
- VPs of Sales defending accelerator rates
What's inside
5 sections, each listed with its own size. The first is previewed below; the remaining 4 come with the download, with blank rows ready to fill in.
| Section | Size | Previewed |
|---|---|---|
| Plan inputs | 6 columns, 4 worked example rows | Below |
| Cost by attainment level | 5 columns, 8 worked example rows | In the download |
| Checking the math | Guidance notes | In the download |
| Variable-only cost of sales | 5 columns, 3 worked example rows | In the download |
| Before sharing with finance | 8-point checklist | In the download |
Preview of section 1
Plan inputs
Example team. Replace with your own headcount and plan terms.
| Role | Headcount | Base each ($) | Target incentive each ($) | Payout curve | Total base ($) |
|---|---|---|---|---|---|
| AE | 10 | 120,000 | 120,000 | 12.5% of bookings to quota (120,000 / 960,000); 25% above | 1,200,000 |
| SDR | 4 | 54,000 | 36,000 | Assumed linear with team attainment | 216,000 |
How to use it
1. Enter real headcount by month, not year-end headcount
The example uses full-year headcount for clarity. In your model, prorate base and target incentive for hires and departures, or the cost will be overstated.
2. Use each role's actual payout curve
Pull rates and accelerators from the plan documents. If SDR or manager variable pay does not scale linearly with team attainment, change those rows to match the plan.
3. Set employer burden with finance
Payroll taxes and benefits vary a lot by country and company. The example uses 20% of base as a placeholder; replace it with your own rate.
4. Look at the 80% column first
Cost of sales is highest when attainment is lowest because base does not flex. If the 80% column is unacceptable, the fix is usually quota or headcount, not accelerator rates.
Frequently asked questions
How do you calculate cost of sales for a sales team?
Add base salaries, variable pay, and employer burden for everyone in the sales org, then divide by bookings for the same period. In the example, 3,379,200 / 9,600,000 = 35.2% at 100% attainment.
Why does cost of sales go down when reps over-perform?
Base pay is fixed, so each extra booking dollar only adds variable pay. Even with accelerators, the marginal cost of upside bookings is usually below the average cost at plan.
What is a good cost of sales percentage?
It depends on deal size, cycle length, and growth stage, so there is no single benchmark worth quoting. Track your own trend over time and compare the marginal cost of upside with the average.