An SDR compensation plan defines how a sales development representative earns base and variable pay. It should explain which results count, who verifies them and when payment happens. The representative should be able to understand the calculation without reconstructing it from several spreadsheets.
Start with the role. An SDR who researches and qualifies outbound accounts has different responsibilities from someone who responds to incoming enquiries. The plan should reflect the work and the outcomes that person can influence.
Define base pay and on-target earnings
On-target earnings, or OTE, combines base salary with the variable amount earned at target performance. State the period and the assumptions behind that target.
For a fictional example, annual OTE of $80,000 could consist of a $55,000 base and $25,000 in variable pay. These figures illustrate the arithmetic; they are not a salary benchmark or a recommended pay mix.
Assess the mix against the responsibilities and uncertainty in the role. Do not copy a percentage split without checking the lead sources, territory and support available to the representative.
Choose what the SDR compensation plan rewards
Meetings held
A meeting measure needs a definition of an eligible attendee and a relevant purpose. Decide how cancellations, rescheduling and duplicate meetings count. Otherwise, a simple target can create disputes about what the representative actually achieved.
Accepted opportunities
If the plan rewards qualified opportunities, agree the acceptance criteria with the receiving sales team. State who accepts the record, how quickly they must review it and how to resolve a disagreement.
Use evidence the SDR can collect. An opportunity should not depend solely on an account executive’s unexplained judgment.
Pipeline or closed revenue
These measures connect the plan with later sales outcomes, but they need careful attribution. Define how value is calculated and what happens when scope, ownership or timing changes.
Consider the delay and the SDR’s influence over the result. A representative may have done the agreed qualification work even if another part of the sales process later fails.
Show how the calculation works
Use worked examples at below-target, target and above-target performance. Include an ordinary exception, such as an opportunity accepted after the reporting deadline.
Continuing the fictional example, 100 eligible opportunities at $250 each would produce $25,000 in variable pay. That calculation does not establish that 100 opportunities is a feasible target. Test the volume against the available accounts, activity and conversion assumptions.
If you use an accelerator, explain when the higher rate starts and which results it applies to. If the plan has a cap, state it clearly. Model the payout in unusual cases before adopting either rule.
Make exceptions explicit
Explain how the plan handles new starters, changes in territory and shared work. Use evidence from the role when setting a ramp period rather than assuming every new hire becomes productive at the same pace.
Also define the record used to calculate pay, the review timetable and the route for a correction. Give the representative access to enough information to check the result.
Test for unwanted behaviour
Ask what someone could do to earn more without producing the intended result. A meeting target might reward weak appointments. A pipeline-value target might encourage inflated estimates.
Then check whether the proposed control creates another problem. A strict acceptance gate, for example, needs timely and consistent decisions from the receiving team. Review the plan as part of the wider sales operations process.
Review the plan with the people using it
Walk through the examples with SDRs, managers and the people responsible for calculating payments. Record unresolved questions before the plan takes effect.
After use, review disputed cases and compare the rewarded results with the intended work. Use those findings when reviewing the plan, and make any changes clear to the people affected.
