Jonas Tanaka· Compensation Analyst, Steinbach Industrie
Asked in Sales Compensation ·
Bookings or recognised revenue as the measure when pricing is usage-based?
I am the first compensation hire at a cloud infrastructure company in Singapore, around 45 sellers across South-East Asia. We moved from annual subscriptions to usage-based pricing last year. Customers now sign a commitment that is often small and then consume far more, or occasionally far less.
The plan still pays on the booked commitment at signature. Reps are steering customers towards larger commitments than they need, which customers dislike, and the reps who land a small commitment that grows tenfold get almost nothing.
Should we move the measure to consumed revenue, and if so how do you avoid reps waiting a year to be paid?
4 helpful · 3 insightful · 4 agree · 3 replies · 149 views · 8 following
Accepted answer· by Lena Lindqvist
We went through this in 2024. We now pay 40% of the incentive on the committed amount at signature and 60% on consumption billed in the first 12 months, paid monthly in arrears. The signature payment keeps cash flowing for the rep. The consumption payment is where the real money is, and it rewards landing the right customer over the biggest paper commitment. Quota is set on first-year consumption, not commitment. That was the harder change, because forecasting consumption per territory was new for everyone.
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