You closed a $300K 3-year deal. Is your commission based on $300K or $100K? When does it pay? It depends.
Common Payment Structures
- TCV (Total Contract Value): Commission on full $300K at signing
- ACV (Annual Contract Value): Commission on $100K, paid each year
- First Year Only: Commission on year 1, nothing for renewals
- Hybrid: Higher rate year 1, lower rate years 2-3
Why It Matters
A 10% commission on TCV = $30,000 at close.
A 10% commission on ACV = $10,000 per year for 3 years.
Same deal, very different cash flow.
Questions to Ask
- Is commission based on TCV or ACV?
- When does commission pay out?
- What happens if customer cancels in year 2?
- Do I get credit for renewals?
💡 Pro tip
TCV commission is better for cash flow but watch for clawbacks. If the customer churns in year 2, you might owe money back.
Bottom Line
Multi-year deals can be goldmines or traps. Understand exactly how and when you get paid.
Track your commission accurately
Stop guessing. Know exactly what you are earning.
Try Comish Free →