It affects how your team prioritizes deals, how accurately you can forecast, how confident reps feel about their earnings, and how much time leadership spends resolving disputes. Most importantly, it shapes what your company optimizes for in the earliest and most fragile stage of growth.

If you’re a startup building your first comp plan, here are the top 10 considerations to get right from day one.

1) Align the comp plan to your go-to-market goals (GTM alignment)

Before you choose commission rates or accelerators, define what the company is optimizing for:

• New logo growth (land)
• Expansion ARR (expand)
• Shorter sales cycles
• Larger contract values
• Cash flow and collections
• Retention and deal quality

Your compensation plan should reward the outcomes that matter most right now. If your goal is new ARR but you pay heavily on upsells, don’t be surprised when pipeline skews away from new business.

Pro tip: Write a one-sentence objective like:

“We pay most for net new ARR and reward faster cash collection.”

2) Choose the earning event: bookings vs. cash collected (and be explicit)

One of the biggest decisions in early-stage sales compensation is when reps earn commissions.

Common choices:

• Pay on bookings (contract signed)
  Best for speed and motivation, but can create cashflow risk if customers delay payments.
• Pay on collections (cash received)
  Best for cash alignment, but can feel less in a rep’s control.
• Hybrid model (best of both)
  Example: earn on bookings, but payout happens after first invoice is paid (or in monthly tranches).

Your choice should match your startup’s financial reality — not just what “sounds fair.”

3) Define what is commissionable (commissionable revenue rules)

Most comp plans fail due to ambiguity, not math.

You need clear rules for what counts as commissionable revenue:

• Is it ARR only, or ARR + fees?
• Do multi-year contracts get credited upfront or annualized?
• Are discounted deals treated differently?
• What about one-time services or implementation?

A startup comp plan should eliminate “gray area deals” as much as possible.

4) Define who gets credit (ownership and split rules)

Crediting rules matter because they influence internal collaboration.

Define upfront:

• Is there one “deal owner,” or is credit shared?
• Are there split credit scenarios (AE + overlay, AE + AM)?
• What happens if the account changes hands mid-cycle?
• How do SDRs get recognized (if applicable)?

Even simple split rules prevent chaos later — especially once deals start getting larger.

5) Set quotas that are achievable and defensible (quota setting)

Your first comp plan lives or dies by quota design.

Early-stage startups often lack historical performance data, so quota setting will be imperfect — but it can’t be random.

Strong quota practices include:

• Aligning quotas to realistic pipeline + win rates
• Defining ramp quotas for new hires
• Avoiding quotas so high that no one hits plan (attrition risk)
• Avoiding quotas so low that payouts blow the budget

A good target: most fully ramped reps should hover around quota, with top performers overachieving.

6) Keep the plan simple enough to explain in under 60 seconds (plan simplicity)

If your reps can’t predict what they’ll earn, motivation drops — and disputes rise.

Your first plan should optimize for clarity:

• Minimal edge cases
• Few payout components
• Clear definitions and examples

If the plan needs a multi-tab spreadsheet and a training course to understand, it’s too complicated for “Version 1.”

7) Use accelerators carefully (incentives without budget surprises)

Accelerators can be powerful, but startups underestimate how quickly they can create payout variance.

Questions to ask before adding accelerators:

• What happens if 2 reps hit 150%?
• What’s the payout exposure if a whale closes?
• Are accelerators tied to the right metric (new ARR, margin, collections)?

Accelerators can work well — but only when modeled intentionally.

8) Prevent comp plan gaming (protect against unintended behavior)

Comp plans shape behavior — including behavior you didn’t intend.

Examples of common gaming dynamics:

• Over-discounting to close deals faster
• Sandbagging deals between quarters
• Prioritizing easy deals over strategic ones
• Closing bad-fit customers who churn quickly

Avoid this by implementing guardrails like:

• Clear eligibility requirements
• Discount approval rules
• Optional clawback policies (if relevant)
• Definitions that prevent double counting

You don’t need complexity — you need clear rules.

9) Define payout timing and operations (commission payout schedule)

Even a great comp plan fails if payouts are unpredictable.

Make payout mechanics explicit:

• When do commissions get calculated?
• How often are commissions paid (monthly vs quarterly)?
• What data is used as source of truth?
• How are corrections handled?

Consistency matters. Reps plan their finances around expected payout timing.

10) Make commission calculations easy to verify (trust + transparency)

The fastest way to lose rep trust is forcing them to “guess” if they got paid correctly.

Your team should be able to see:

• Exactly which deals counted
• Which rate applied
• Any splits or adjustments
• What got paid this cycle vs later
• A clear trail from CRM → payout

When commissions are explainable, disputes disappear — and reps sell more.

Bonus: A simple checklist for your first sales comp plan

Use this checklist before rollout:

✅ Clear comp plan objective tied to GTM goals
✅ Simple earning event (bookings, collections, or hybrid)
✅ Written definitions for commissionable revenue
✅ Ownership and split rules established
✅ Realistic quotas and ramps
✅ Minimal complexity (rep can understand it fast)
✅ Accelerator exposure modeled
✅ Guardrails against gaming
✅ Payout timing consistent and documented
✅ Commission math is auditable and easy to verify

Why EasyComp is the ideal solution for startups running their first comp plan

Most startups run comp in spreadsheets at the beginning — until something breaks:

• deals get complicated
• payout timing becomes confusing
• exceptions pile up
• finance needs auditability
• reps lose confidence in the numbers

EasyComp is built to help startups launch and scale compensation without the spreadsheet chaos.

With EasyComp, you get:

• Clear commission explanations so reps always know how their payout was calculated
• Accurate earnings and payouts tracking across bookings and collections workflows
• A system of record for commission logic (no more mystery formulas)
• Fewer disputes and faster payroll cycles with automated calculations
• Flexible plan design so your comp model can evolve as your GTM matures

If you’re setting your first plan now, the best time to operationalize comp is before it becomes painful.

EasyComp helps startups pay correctly, explain clearly, and scale confidently.

By Jose Fernandez

About the Author

‍Jose Fernandez is part of the team behind EasyComp.ai, building infrastructure that helps companies run sales compensation without spreadsheets, confusion, or delays. He believes incentive systems should be easy to operate—and crystal clear to the people who earn them.

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Sources: What Startups Should Look For When Setting Up Their First Sales Comp Plans