Account Executive Commission Structure: What to Expect

If you're considering a new job offer as an account executive (AE), you're probably curious about the commission you can earn.

This is a significant part of your salary package, which can affect your on-target earnings (OTE).

In this guide, we'll discuss different commission types for AEs, factors affecting variable pay, and tips on negotiating a better deal.

Understanding Account Executive Salary

Before discussing the details of commissions, it's important to understand an account executive's salary structure.

Account executives are part of the tech sales team. For most companies, their sales teams have an important role in driving revenue. This means their compensation is often tied to the success of the business.

Most AEs earn a base salary and variable pay, which form the on-target earnings in sales. 

The variable pay includes commissions, bonuses, and other incentives for meeting or exceeding business objectives.

On average, the account executive salary in the U.S. ranges from $76,000 to $275,000 per year. Several factors determine such a wide range, and we’ll walk through them to see where in the range you fall.

Different Compensation Structures to Expect

Now that we’ve covered salary basics let’s discuss the different sales compensation plans you might encounter as an account executive.

• Base salary + commission: This is the most common salary structure for AEs. They receive a fixed salary, which provides steady income and commissions for closing deals.
• Commission-only: While rare, a number of account executives earn a percentage of each deal with no base salary. This compensation model can lead to higher earnings but comes with more risk.
• Base salary + stock options: In addition to a fixed salary, some companies offer stock options as part of the compensation package. This allows AEs to own a stake in the company, which gives them the potential to earn more based on the company’s performance over time.

Types of Commissions You Can Earn as an Account Executive

The potential for large commissions draws many professionals to AE roles. Let's look into what commission structures you can encounter in the field.

1. Flat Commission

With a flat commission structure, you earn a fixed percentage on every sale, regardless of the size of the deal. This is a straightforward and predictable way to build your income.

This structure can offer steady earnings if you're working with smaller deals and high-value accounts.

However, if you're closing deals with high annual contract values, the percentage remains the same, so you don't earn additional incentives for larger sales.

Flat commissions work well in sales environments with a steady flow of deals. They help you focus on both small and large sales equally.

2. Percentage of Sales Revenue

In this model, your commission is directly tied to your sales revenue as an account executive.

The more you sell, the more you earn. It's that simple.

This structure is great if you enjoy working with large clients, where each deal can bring in substantial revenue.

For example, if you close a sale with a high annual contract value, your commission percentage can significantly boost your total pay.

This type of commission rewards high performers and motivates you to maximize every sale’s potential. It’s especially common in industries where deal sizes vary greatly.

3. Profit-based Commission

With profit-based commissions, your earnings depend on the profitability of each sale, not just the revenue generated.

For example, you might close a high annual contract value deal, but if the profit margin is low, your commission would reflect that.

This model encourages you to focus on closing deals that are profitable for the company. So, you must take into account the discounts and operational costs that could affect the bottom line.

4. Bonuses for Exceeding Sales Quota

Bonuses are additional compensation that rewards account executives for meeting and exceeding their sales quotas.

Companies often set these targets based on customer lifetime value or other key metrics tied to revenue growth.

These bonuses can be structured quarterly or annually, which can give you short-term and long-term earning opportunities.

How Much Could Account Executives Earn on Commissions?

On average, account executives earn commissions and other variable pay amounting to around $53,000 to $99,000 every year.

Top performers can receive even higher commissions, which can exceed six figures annually.

You may wonder why this range is so wide. Many factors affect the total commission.

For one, account executives who close high-value deals earn higher bonuses than AEs working with small clients.

Factors That Affect Account Executive Commissions

As previously mentioned, many factors influence the total commissions you can receive as an account executive. Let's take a closer look below:

1. Industry and Market Demand

Industries with higher annual contract values, such as tech or finance, generally offer more lucrative commissions.

In these sectors, companies rely heavily on account executives to drive deals that bring in large contracts. They offer competitive commission rates to attract top talent.

Market demand also affects commission rates.

When there is high demand for a company’s products or services, it’s easier to hit revenue targets. This can increase the commissions you earn.

2. Company Size

Compared to startups, big companies often have more structured revenue operations and higher budgets. This can result in better commission packages.

However, that doesn't mean you should ignore opportunities in smaller companies. They might offer other benefits, such as stock options, to catch the interest of job seekers.

3. Location

The location is another factor that can impact commission earnings.

Regions like New York or San Francisco can offer higher commission rates to match the high cost of living.

On the flip side, working in lower-cost areas may result in smaller commissions. However, the actual compensation could still be competitive if you factor in the total take-home pay.

4. Sales Cycle Length

The length of the sales cycle directly affects how frequently you’ll close deals and earn commissions.

Shorter sales cycles typically result in more frequent commission payouts.

Meanwhile, longer cycles tied to high annual contract values can result in fewer but larger compensations.

5. Client Size and Deal Volume

Working with larger clients often means closing higher-value deals.

If you handle enterprise accounts, the annual contract value will be much higher than with smaller clients, leading to bigger commission checks.

The volume of deals you close will also affect your total income. Closing more deals, even at smaller contract values, can lead to steady earnings.

6. Individual Performance

Your ability to meet or exceed sales quotas directly impacts your commission.

If you constantly surpass your sales target and close deals with large corporations, you can receive higher commission rates.

Companies may even adjust their commission structure to reward top performers. For example, they might provide additional incentives like higher commission rates for longer contract lengths.

How to Negotiate a Better Commission and Sales Compensation Plan

Just because you know all the factors that go into determining your commission doesn’t mean you’ll be handed the best offer immediately. You need to learn how to negotiate the job offer for better rates and compensation plans. Doing so can significantly improve your earnings and lead to financial security.

Check out some negotiation tactics you can follow to get higher rates.

Research Industry Standards

Before negotiating, gather data on industry pay for your role.

You must look into average base salaries, commissions, and other additional pay, such as stock options.

Knowing the industry standards allows you to enter negotiations with confidence.

Employers also expect you to be informed, and presenting data strengthens your position.

Highlight the Value You Bring to the Company

If you've already worked for the company as an AE for quite some time, you must emphasize the value you bring.

Mention your past achievements within the organization, such as exceeding sales targets or securing deals with large corporations.

This shows your employer that you are worth investing in.

Discuss Your Sales Performance History

If you're seeking a new position at another company, you must share data on your previous performance during salary negotiations.

You can demonstrate how you’ve consistently met or exceeded sales quotas in your previous AE role. 

Make sure to include key metrics, such as sales efficiency or average contract length closed, to highlight your strengths.

This proves to future employers that you have what it takes to deliver strong results.

Time Your Negotiation

Timing is important when asking for a better compensation plan. It sets a positive tone for the discussion.

For example, if you received a job offer or are expecting an annual performance review, you can take this opportunity to negotiate.

Did the company recently hit important revenue targets? Or did you close a large deal? These are also ideal moments to negotiate and show your impact on the organization.

As much as possible, avoid salary negotiations during busy periods or recessions. This can lower your chances of securing a better deal.

Explore Other Benefits and Perks

If negotiations on commission don’t go as expected, consider asking for other perks.

These may include stock options, remote work flexibility, or additional vacation time.

Although these benefits do not directly boost your commission, they can add significant value to your total compensation.

Account Executive Career Trajectory and Compensation

As you advance your account executive career, your responsibilities and compensation will change. 

Below is a breakdown of the key tech sales roles you may encounter and what you can expect in terms of pay.

Technical Sales Representative

Most account executives start their tech sales career as technical sales representatives.

They work closely with customers to explain complex products and pass them on to other tech sales professionals, who will handle the closing of the sale.

On average, technical sales reps receive an annual salary of $115,000 to $213,000. Additional pay, which includes commissions, can amount to around $51,000 to $95,000 of the total compensation.

Junior Account Executive

Junior account executives are responsible for closing smaller deals and building client relationships. They typically have less than two years of experience in the job.

Junior AEs earn an average annual salary between $103,000 and $182,000. They can also expect commissions worth around $47,000 to $87,000 every year. Top performers earn even more money.

Senior Account Executive

Senior account executives will manage high-value clients and close larger deals. They may also mentor junior AEs.

Since they deal with important individuals and businesses, senior AEs can command higher average salaries of around $151,000 and $261,000 per year.

They also receive larger commissions, which can range between $70,000 and $131,000 per year.

Sales Manager

Sales managers oversee the entire sales team, set revenue targets, and develop sales strategies to meet quotas. They focus less on individual deals and more on ensuring the team’s success.

Sales managers typically earn $125,000 to $233,000 every year. They also receive additional pay of around $62,000 and $116,000.

Account Manager

Account executives who are interested in building customer relationships can transition into an account management (AM) role.

Account managers maintain and grow connections with existing clients through regular check-ins and account monitoring. They must also identify upsell opportunities to drive more revenue for the company.

AMs make between $89,000 and $161,000 every year. On top of their base pay, they also earn $39,000 to $72,000 from bonuses and commissions.

Vice President of Sales

Top-performing account executives can move up the career ladder and become the vice president of sales.

The VP of sales role leads the sales division and works closely with upper management to set company-wide revenue targets.

The average annual salary for this position is around $300,000 to $530,000. The VP of sales also receives commissions and other incentives worth six digits every year.

Let Better Career Help You Highlight Your Value

Need further help negotiating your account executive salary and securing your dream job? We’ve already helped account executives. For example, Jon Barrino learned to present himself professionally, showcasing his skills, talent, and experience. Working with us, Jon landed a great senior account executive role.

Here's how Better Career can assist you:

• Job Accelerator Program: Follow our step-by-step guide to land a tech job quickly and efficiently. Whether you want to be a Sales Engineer, Customer Success Professional, or Project Manager, our mentorship program is designed to accelerate your tech career. Say goodbye to the frustration and guesswork of a typical job search.
• 1-on-1 Career Coaching: Work closely with former tech leaders turned career coaches to land your next Sales or AE role or advance your career. We'll customize the program to meet your unique goals and needs.
• B2B Tech Job Board: Connect directly with key people at hiring companies through our curated job board for B2B tech positions. This includes direct LinkedIn profiles and posts for each listing.

Have other questions? Fill out our contact form, and we'll get in touch with you soon!

FAQs About Account Executive Commission Structure

What is a good commission rate for an account executive?

A good commission rate for account executives typically ranges from 10% to 20%. However, the total commission pay can vary widely depending on the industry, deal size, and company, among other factors.

Do all account executive roles offer commission-based pay?

Most account executive roles include commission-based pay. That said, the amount and type of commission you can receive may differ from one company to another.

For example, some businesses follow a fixed commission structure, while others give a percentage of the sales revenue.

How often is commission paid to account executives?

Commissions are generally paid either monthly or quarterly, depending on the company's policies. Some organizations may pay a commission after each deal closes. In contrast, others wait until certain revenue targets are met.