By enabling the automatic commission rates feature when building paths, Admins can streamline calculating commission rates, reduce errors, and increase visibility into compensation plan details. In this article, you'll learn how to set up automatic commission rates, including entering in base salary and variable pay information for your reps, generating rates, and including in plan verification requests.

Before getting started, here are a few helpful compensation formulas to understand that are foundational to calculating commission rates:

In order to set up automatic commission rates in your workspace, follow the below steps.

The first step to setting up automatic commission rates, is to enable the "Enable automatic rate calculations" toggle in the path builder. You will see this toggle when building a path in a plan that contains an earnings rule based on commissions:

Since commission rates are applied to a revenue numbers to calculate commissions, automatic commission rates is only applicable to earnings rules based on currency field types, and not number field types.

If the quota for this path changes over time, the commission rate will also need to change over time, and so this feature will be automatically enabled for you.

After enabling the toggle, you'll need to enter in the default base commission rate and multipliers for each tier, if applicable. The default commission rate will be used in the event that the variable & quota are not entered and/or the commission rates are not generated.

The multiplier needs to be entered in a number format and can include up to 6 decimal places. Multipliers can NOT change over time, so if the multiplier will change within the plan effective dates, a new plan will need to be created.

The last step in the path builder is to set the variable pay path weighting, which determines how much of the total variable pay is allocated towards payout on this path. In other words, it determines the numerator in the above formula for calculating a commission rate. The path weighting is required for every path in which a commission rate will need to be calculated.

The path weightings across paths do NOT need to add up to 100%. In addition, the variable pay path weighting does NOT need to take into account the time period, as QuotaPath will automatically prorate the variable pay amount based on the quota and earnings period.

After all the paths in the plan have been built, assign users to the plan and enter in their base salary and variable pay amounts.

The base salary and variable pay amounts should be annualized, regardless of the effective dates of the plan, or the quota/rate periods.

Only the variable pay will be used to calculate the commission rate. Both the base salary and variable pay can later be included in plan verification.

After assigning users to the plan and entering in the base salary and variable pay amounts, the last step is to generate the commission rates.

Open a path in a plan, and click "View & Assign Rates". In the rate table of the path manager, you'll see the variable amount to be used in the commission rate calculation next to the plan assignee's name. Before generating the commission rates, hover over the variable amount for a breakdown of the calculation to confirm accuracy.

If you've already set the quotas for each user and reviewed the variable pay breakdown, the last step is to generate the commission rates.

Click the calculate rates button to generate the commission rates. You'll need to generate the commission rates for each applicable time period. To finish, make sure to click 'Save' before leaving this page!

If new users are assigned to the plan, you'll need to come back to this page to generate the rates.

After you've set up automatic commission rates and you're ready to send a plan for verification, you can choose whether to include the base salary, variable pay and on-target earnings in the plan verification. The on-target earnings will be automatically calculated by summing the base salary and variable pay.

In the plan verification preview, check the boxes of which compensation details to include in the request. Plan assignees will only see their assigned base salary, variable pay, quotas, and commission rates.