Evaluating Earning Potential in SaaS Sales: A Practical Framework
- Jake Citrano
- Aug 22
- 7 min read
Introduction
SaaS sales has been incredibly volatile over the past several years, often placing sales professionals in challenging situations. Just a few months into a new role, despite their skills and dedicated efforts, many realize that consistently exceeding targets, let alone truly controlling their earning potential, is an uphill battle.
This experience frequently leads reps to disconnect from the core reason they entered sales, the pursuit of uncapped commissions. A common reaction is to immediately seek a higher base salary, mistakenly equating a larger base with greater security or guaranteed earnings. However, the reality is that a high base salary does not necessarily guarantee job security and often does not translate to a stronger opportunity for true earning potential.
While OTE is just a number is a common refrain, many reps still struggle to assess the true earning potential by simply looking at current team success. This historical data is often unreliable for a few key reasons, especially at early stage startups with few reps or fast growing organizations quickly adding headcount.
Why Historical Data Can Be Misleading
Small Sample Size If the team is very small, you are relying on data from only a few reps. It is hard to judge your own potential when these reps could be significantly more or less qualified or experienced than you.
Skewed Statistics Companies might present averages that look great but are misleading. For example, one rep consistently hitting 300 percent of target, perhaps due to long tenure or unique access to opportunities, can drastically skew the overall team average. Always ask for the median, not just the average.
Rapid Headcount Growth In fast growing companies, adding more sales reps quickly can dilute available opportunities. Past individual performance becomes impossible to replicate when there are suddenly more people competing for the same deals.
While understanding historical data is important, it is not the ultimate indicator of your individual earning potential.
The Earning Potential Framework
This framework helps you evaluate two critical components of any compensation plan: your earning floor and ceiling and your degree of control over your results.
The goal is to answer three key questions:
Are the results truly in your control, or are outside factors dominating
What is your realistic earning floor
What is your true earning ceiling
Step 1: Evaluate Your Control Over Results
Beyond the compensation plan, you need to understand the operational realities that dictate your ability to hit targets. This step determines if the company genuinely positions you for sales success.
Here is a framework for assessing operational viability: Performance, Opportunity, Customer Satisfaction, P.O.C.S.
1) Company Performance: look beyond rep stats
Scrutinize the company's historical ability to consistently close deals within their Ideal Customer Profile, ICP. The key question: how easy or hard has it been for them to win deals with the right customers
Ask the following:
What is the startup's clearly defined ICP, be cautious if they cannot articulate this precisely
How many ICP customers have they closed in the last 12 to 24 months, drill down into relevant customer acquisition within their core market
What is their historical conversion rate from qualified opportunities to closed won deals within the ICP
Why does the company win or lose deals, understand their core differentiators and recurring objections
How has the pipeline been sourced historically, this indicates reliance on your own prospecting vs company provided leads
View these answers from a macro level, like an investor. Viable answers are good, but do not automatically guarantee a great move or strong earning potential.
2) Territory and Opportunity: is there enough for you
Even if the company can close deals within its ICP, there needs to be sufficient opportunity and a viable territory for you.
Consider these questions:
What does the short term addressable market look like for your role, focus on realistic, immediate opportunities within existing ICP accounts you can sell into
What is your specific territory, ensure you have enough ICP accounts assigned to you
Are you confident in your ability to generate the pipeline needed to hit your required deal volume, what tools, resources, or inbound leads are provided, are you prepared to self source if inbound leads are minimal
3) Customer Satisfaction: the hidden lever
This is an often overlooked yet crucial factor. Are current customers genuinely happy with the product or service
If yes: this signals strong product market fit, leading to more confident selling, positive word of mouth, and customer advocates
If no or mixed: you will sell with less confidence. A lack of customer success eventually leads to churn, impacting new business and making selling increasingly difficult. High churn is a clear indicator of underlying issues
Ask for renewal and churn numbers, if applicable, scrutinize reviews on platforms like G2, and, if possible, politely ask to speak with a current customer.
A Note on Experience and Risk
This framework is not one size fits all. If you are tackling unfamiliar deal sizes or sales motions, that adds uncertainty. While it does not mean you should not take the role, ensure you have confidence in the company's resources for ramp up and your own adaptability. Similarly, some opportunities are riskier, like building an enterprise segment with little existing traction. This is not inherently bad if you enjoy building and solving complex challenges, as it could offer substantial earnings and career upside. Just be clear about the risks involved.
Part 2 and 3: Determining Your Earnings Floor and Ceiling
Even with a promising opportunity, you need to understand the numbers to see your true earning potential. This section guides you through calculating potential earnings using gathered information and compensation plan details. This calculation is not meant to be perfect, but it provides a strong gauge of your earning floor, what you would make in a less than ideal year, and earning ceiling, your maximum potential.
Key Information You Will Need, with example values
Base Salary: $80,000
Commission: 10 percent on an $800,000 annual quota. Accelerators kick in over $1M.
Conversion Rate: company reports 25 percent over the past 12 months, Opportunity to Close.
Ramp or Bridge Pay: first three months guaranteed commissions on OTE.
Pipeline Generation: solid SDR team, good sales tools, some inbound leads, but significant hunting expected.
Average Deal Size, ADS: $40,000
Other example considerations:
Large territory, 500 plus accounts, no restrictions.
New business only, no cross sell or upsell.
Starting January 1, regular calendar year.
Calculating Your Earning Floor
Your earning floor is a realistic underwhelming year, assuming consistent effort without extreme, uncontrollable disasters.
First year floor breakdown, example:
Ramp Quarter Earnings: company guarantees commissions for Q1 as if you hit quota.
Quarterly quota = $800,000 divided by 4 = $200,000
Guaranteed commission, Q1 = 10 percent of $200,000 = $20,000
Post ramp quarterly performance, floor scenario: for the remaining three quarters, assume conservative performance.
Opportunities generated: 10 per quarter
Conservative conversion rate: 20 percent, lower than company average
Deals closed per quarter: 20 percent of 10 opportunities = 2 deals
Revenue per quarter: 2 deals times $30,000, under average ADS = $60,000
Commission per quarter: 10 percent of $60,000 = $6,000
Total commissions for 3 post ramp quarters: $6,000 per quarter times 3 = $18,000
Total first year earning floor:
Base salary: $80,000
Ramp pay, Q1 commission guarantee: $20,000
Commissions, post ramp Q2 to Q4: $18,000
Total first year floor = $118,000
Importance of your floor calculation: determining if $118,000 is a good floor is a personal decision. The power of this exercise lies in comparing realistic floors across different opportunities. For example, a role with a $100,000 base and no ramp pay could have a floor of just $100,000 if closing deals in the first year is uncertain. Suddenly, the $80,000 base role with bridge pay looks comparable from a floor perspective. Focus on a diligent but underwhelming scenario, not highly unlikely catastrophic events.
Calculating Your Earning Ceiling
Now, calculate your earning ceiling, what you could make in a top performing, crushing it year, assuming you are past the initial ramp up.
Best case scenario variables:
Base salary: $80,000
Commission: 10 percent on an $800,000 annual quota
Accelerators: kick in over $1,000,000 in annual revenue, for example, 15 percent
Ramp Pay: $20,000 guaranteed commission for the first quarter
Average Deal Size, ADS: $50,000, consistently closing larger deals
Conversion rate: 30 percent, 5 percent above company average
Opportunities generated: 20 per quarter, strong SDR support, inbound, and hunting
Ceiling year breakdown, example:
Quarterly and annual performance, peak
Deals closed: 20 opportunities times 30 percent conversion = 6 deals per quarter
Revenue generated: 6 deals times $50,000 ADS = $300,000 per quarter
Total annual revenue: $300,000 per quarter times 4 = $1,200,000
Total commissions, annual peak performance
Commission on quota, $800K: 10 percent of $800,000 = $80,000
Revenue above quota: $1,200,000 minus $800,000 = $400,000
Accelerator commission, on revenue above quota: 15 percent of $400,000 = $60,000
Total performance commissions: $80,000 plus $60,000 = $140,000
Total first year earning ceiling:
Base salary: $80,000
Ramp pay, Q1 guarantee: $20,000
High performance commissions, annualized: $140,000
Total first year ceiling = $240,000
Importance of your ceiling calculation: calculating your earning ceiling helps define what great looks like in a role. This exercise lets you consider, if everything goes right and I am performing at my best, can I actually make the money I want and smash my goals. This helps confirm upside potential and can highlight red flags in the compensation structure that might limit high performance.
Other Important Points for Both Floor and Ceiling
Longer term opportunities: some roles, like residual based or Enterprise Sales, might not offer high first year upside. In these cases, apply the same thinking but look at what Year 2 or Year 3 could realistically look like for your floor and ceiling.
Comp plan volatility: SaaS compensation plans can change yearly, but typically not drastically. This analysis should give you a good read on the sales culture, does the company genuinely aim to make high performers high earners, do they have a reliable commission floor. These cultural aspects often remain consistent.
In Closing
Navigating the volatile world of SaaS sales requires more than just trusting OTE or historical team performance. By leveraging this framework, meticulously assessing a company's Performance, Opportunity, and Customer Satisfaction, P.O.C.S., to gauge your control, and then precisely calculating your realistic earning floor and ceiling, you gain clarity that few reps possess. This proactive approach empowers you to cut through the noise, identify genuine opportunities, and make data driven career decisions that truly align with your financial goals. Equip yourself with this understanding, and confidently take control of your earning potential in SaaS.
About ClosedWon Talent
ClosedWon Talent is a specialized sales recruiting firm that helps growth focused companies hire top GTM talent. We partner with founders, revenue leaders, and investors to build high performing sales teams across SaaS and beyond.
What sets us apart is the ClosedWon Method, a proven recruiting framework built on speed, precision, and transparency. We combine deep industry expertise with a curated candidate network to deliver shortlists of qualified, motivated sales professionals...fast. Our team does not just fill roles, we act as embedded partners who understand how to assess selling style, territory experience, and growth potential based on each client’s specific needs.
