77. What is the better SaaS sales compensation plan: paying reps the 12 months up front for the contract value or paying them pro-rated 12 monthly payments? You shouldn’t pay reps out monthly for deals that are paid monthly. Period. Because while it does sort of align interests, run the math ... and you’ll see, it’s too hard for them to make any real money this way. It takes too long. So ... just pay them the commission on all 12 months upfront ... and then ... What you need to do is implement a claw-back. I.e., if the customer cancels in < 12 months, they forfeit a pro-rated amount of their commission (really, this means it’s taken out of future commissions). And then, incent them with a higher commission for annual prepayments over monthly. That will work well, too. Finally, don’t sweat the claw-backs. You may lose a few nickels if the rep leaves before you can claw back, but it won’t be much. SAASTR.COM 74