Is Uncapped Commission the Secret to Better Rep Performance?
Uncapped commission means there is no limit to the amount of commission a sales rep can earn during any given pay period.
By Samuel Holzman, Writer, Salesforce
June 9, 2025
Should you place a limit on how much commission your sales reps can earn? It’s a tricky subject that every sales organization must contend with. In this article, we’ll define uncapped commission and offer the key benefits of an uncapped commission strategy for modern sales organizations.
What is uncapped commission?
Uncapped commission means there is no limit to the amount of commission a sales rep can earn during any given pay period. An uncapped commission plan may also be referred to as unlimited commission, no commission ceiling, or unlimited earnings potential. An uncapped commission plan gives sellers an incentive to sell even beyond their quota, as they’ll be able to continue earning commission no matter how much revenue they generate.
Capped vs uncapped commission
The difference is simple: Capped commission structures have a limit on potential commission earnings and uncapped commission structures do not.
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How to calculate uncapped commission
Uncapped Commission = sales revenue x commission rate (the designated percentage a seller earns of the revenue they generate).
This formula becomes more complex when additional components like accelerators (a higher rate that kicks in when a seller exceeds quota) are involved, as you’ll see in the examples below.
Examples of uncapped commission
1. Basic uncapped commission
A sales rep at a cloud software company has a flat 10% commission rate that doesn’t change after she’s exceeded her quota of $500,000.
- She closes $750,000 in revenue.
- She earns $75,000 in commission.
2. Uncapped commission with an accelerator
A sales rep at a manufacturing company has a commission structure that includes accelerators:
- 8% commission rate up to his quota ($1 million in revenue).
- 10% for sales between $1 million and $1.5 million.
- 12% for sales beyond $1.5 million.
The seller ultimately closes $2 million and earns:
- $80,000 on the first $1 million.
- $50,000 on the next $500,000.
- $60,000 on the next $500,000.
- A total of $190,000 in commission.
The benefits of uncapped commission
As long as you’ve established an effective sales planning process – in other words, setting sales quotas and commission structures that incentivize the right behaviors and align with your sales targets – then uncapped commission will likely result in a positive ROI. But there are other key benefits:
Boosts motivation
An uncapped commission structure means your sales reps have a reason to continue building out pipeline and prospecting after they’ve met or exceeded their quota.
This becomes crystal clear when contrasted with capped commissions: When a sales rep performs so well that they reach a commission limit in a given pay period, it’s only natural for them to experience a dip in motivation – as one of their most important performance incentives is no longer in play.
Encourages good sales behavior
Naturally, sales reps whose commission is capped will frame their sales around this limitation. Once a rep hits their commission limit, they may push deals into the next pay period to ensure they maximize their commission payout rather than close them promptly and receive no commission. This isn’t a great experience for prospects.
Uncapped commission, on the other hand, doesn’t create hoops for reps to jump through. When reps continue to receive commission, regardless of the number of deals they close in a given pay period, they’re incentivized to prioritize effective selling tactics rather than pursuing loopholes.
Increases revenue
With no commission limit, reps are encouraged to go after more high-value deals; that means higher commissions and more company revenue.
Promotes trust in leadership
Capped commission structures risk creating an adversarial relationship between sales teams and leadership. Sales reps might understand a commission cap if it’s being implemented due to temporary financial struggles, but in the long term, top performers may not respond favorably to being told there’s a ceiling on their earning potential.
Protects against rep turnover
Sales turnover is a massive issue; the average turnover for sales professionals is estimated at 35% according to some sources . With uncapped commission, rep earning potential is wide open, motivating them to sell more, faster. If you cap commission, you run the risk of pushing talent to companies that don’t limit income.
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Disadvantages of uncapped commission
While uncapped commission is largely beneficial with the right commission structures, there are several potential drawbacks that companies should be aware of as they plan. These include:
Budget unpredictability
Without a cap, commission payouts can vary significantly, especially during periods of hypergrowth. A single rep or a sales team might earn an unexpectedly high amount of commission, which puts a strain on finance teams and impacts budgeting accuracy.
Internal imbalance
If a small group of reps consistently earns significantly more than their peers, it may impact morale or foster unhealthy competition.
Overemphasis on short-term wins
With an uncapped earning potential, reps may prioritize high-value deals that close quickly, potentially neglecting important long-term considerations around customer fit and retention.
Risk of burnout
Unlimited earnings potential can sometimes over-motivate reps, inspiring them to work unsustainably long hours that leads to stress and eventual burnout.
To mitigate these downsides, companies should closely analyze sales performance over time and identify any potential negative trends related to how reps are looking to maximize their commission earnings.
When should companies avoid uncapped commission?
Although uncapped commission is common in modern sales organizations, there are several reasons why a company might choose to implement a commission cap. If a business is experiencing a period of financial instability or cutting costs, for instance, establishing consistent commission spending may become their top priority until they exit the rough patch.
A business may also implement a commission cap because they want to avoid overpaying sales reps for exceptionally large deals. While these large deals still generate more overall revenue for the company, leaders may be hesitant to pay a rep too much at once out of concern that they’ll negatively impact the rep’s motivation to continue selling.
Make uncapped commission work for you
Uncapped commission may seem to be the norm, but like many elements of sales compensation, it requires careful sales planning. When your compensation plans closely align with your organization’s sales goals, uncapped commission motivates sellers to earn more both for themselves and your business. If you choose to implement a commission cap, make sure you communicate its purpose and impact to all affected sales reps to ensure they stay motivated and engaged.
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Uncapped Commission FAQ
An uncapped bonus is similar in concept to uncapped commission, but typically refers to individual bonus payouts that an employee receives for hitting a designated milestone. For example, a seller receives a bonus for every 10 new sales of a specific product that the company wants to amplify. If that bonus is uncapped, the seller would receive double the bonus amount for 20 sales of that product, triple the amount for 30, and so on.
Companies use uncapped commission as a method to motivate their sellers to deliver as much revenue as possible. When there’s no limit on what a sales rep can earn, they’re encouraged to keep performing and earn money for both themselves and the organization. As a result, uncapped commission can also promote trust and engagement between sales reps and leadership. Sellers feel more respected when they’re compensated for all the revenue they generate for the company, which in turn can promote loyalty and retention.
A company may cap commissions because they want to establish consistency in their commission payouts. They may be experiencing a period of financial instability, and therefore need their budgeting and forecasting to be as accurate as possible. Or they might want to foster a more collaborative and unified sales culture, and therefore limit the amount than any individual seller can earn on their own.
While uncapped commission can be highly beneficial when structured correctly, companies should consider several risks when planning. One primary concern is budget unpredictability. Without a cap, commission payouts can vary significantly, especially during periods of hypergrowth. Other risks include unhealthy competition among sales reps, an overemphasis on short-term wins, and burnout.
Businesses should set clear, realistic sales quotas and commission structures that incentivize and align with sales targets. It's also important to use the right tools and regularly review the uncapped commission plan to ensure it supports company goals.
Uncapped commission means there is no limit to how much a salesperson can earn. This structure acts as a strong motivator for high performance. It often comes with a lower base salary because the potential for high earnings is so great. The lack of a cap offers a strong incentive to sell as much as possible.
Writers were aided by AI to draft these FAQ questions
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