Uncapped Earnings: The Benefits of Limitless Commission

Commission incentivizes sales reps to close as many deals as possible - but should there be a limit on just how much commission they can earn? Read on as we define uncapped earnings potential and explain why limitless commission benefits both sales employees and a company's bottom line.

What is uncapped earnings potential?

The term uncapped earnings potential, or unlimited earning potential, refers to sales compensation plans that put no limit or cap on the amount of commission a sales rep can earn on top of their base salary.

Uncapped earnings vs capped earnings

Unlike uncapped earnings, capped commission means a rep won't be paid commission on deals they close once they cross a specified threshold of commission earned.

When a company caps sales earnings potential, the intention is often to protect budget or ensure that they don't overpay individual sales reps for big deals.

However, the inherent problem with capping a rep's earnings is that it gives salespeople less incentive to close deals and bring in as much revenue as possible - which is a big reason why commission caps are incredibly rare and uncapped earnings are largely the norm across modern sales organizations.

Why companies opt to provide uncapped earnings

Although capping a sales team's earning potential may reduce costs in the short term, the positive impact of uncapped earnings on sales performance can lead to more overall revenue in the long term.

If you've diligently created sales plans and set quotas that reflect your company's revenue goals, teams with uncapped earning potential will be incentivized to exhibit consistent sales performance, which can only result in more ROI for the business.

Let's look at some specific reasons why most sales organizations elect to offer uncapped earnings potential.

1. Maintain employee engagement and motivation

Limitless commission incentivizes reps to stay consistently engaged with their work and focused on the task of generating revenue. If a sales rep hits the point where they're not earning commission, they lose their incentive to continue working on deals and building relationships during that pay period.

Capping earnings can encourage reps to manipulate deal cycles in order to maximize their earnings. For example, if an upcoming deal will result in a rep crossing the commission cap threshold, there's a financial incentive for them to prolong the deal into the next pay period, when they will get full commission payout. This can negatively impact customer experience. Uncapped earnings, on the other hand, incentivize reps to remain consistent in their selling behaviors no matter how much they've earned already.

3. Build trust in the company

The compensation you offer employees is, in some ways, a reflection of how much you value their contribution to the organization. Therefore, a cap on earnings can send the wrong message to sales reps, as it tells them their contributions will only be valued up to a certain point. Offering uncapped earnings potential tells reps that they should contribute as much as they can and all of those contributions will be rewarded.

4. Increase revenue

Sales commission usually represents a percentage of a total contract value - so when you pay a rep a lot of commission, it coincides with the company making a lot of revenue. Sellers with uncapped earnings potential are motivated to close a higher volume of high-value deals, earning them more commission and the company more revenue.

Create a compensation strategy that maximizes the ROI of uncapped earning potential

Uncapped earning potential is a hallmark of an effective compensation strategy - but it's important to emphasize "effective" in that statement. Offering limitless commission paves the way for a positive seller experience and more overall revenue, but like any plan element, it works best when you've put the necessary effort into achieving alignment between your sales plans and overall compensation strategy.

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