Minimum guarantee
A minimum guarantee pays a rep a floor amount of commission for a fixed period regardless of what they sell, typically while a new hire ramps or a territory is rebuilt. Where actual commission exceeds the floor the rep takes the higher figure, and the guarantee usually expires after three to twelve months.
Month three of a new job. The pipeline is real, two deals sit in legal, and the commission line on the payslip reads $900. A minimum guarantee exists for exactly that month: it pays a fixed floor while the work that produces commission has been done and has not yet closed. Without one, the opening quarter of a long sales cycle is a pay cut that arrives when a person is least able to absorb it and most able to take a call from a recruiter.
One question decides what a guarantee really is. Non-recoverable means the top-up is the company's cost and the matter ends there. Recoverable means every dollar of top-up is an advance that later earnings have to repay, and the rep is carrying a debt they may never have registered as one. Both structures get used and both are defensible. What is indefensible is a plan document that promises a guarantee and buries recovery in a clause nobody read at signing. A rep who discovers in month eight that $9,000 of what they were paid is owed back will leave, and will explain why to everyone they know in the industry.
The ending deserves as much design as the floor. A guarantee that stops on a fixed date while a full quota starts the same month produces a step down that can exceed forty percent of take-home pay in one cycle. Stepping the floor instead, full guarantee for three months, then two thirds, then a third, tracks the shape of a real ramp and removes the cliff. Pairing the floor with a reduced quota over the same window is the other half of the job, because a floor under pay with an unreduced target above it only moves the problem to the first unprotected month.
Six months of a stepped-in book
A new rep starts on a non-recoverable guarantee of $4,000 a month of commission, running for six months, while their pipeline converts.
- Commission actually earned, months 1 to 6
- $0 · $900 · $2,400 · $3,600 · $5,200 · $6,100
- Total commission earned on their own sales
- $18,200
- Top-up paid in months 1 to 4, where earnings fell under the floor
- $9,100
- Months 5 and 6, earnings above the floor
- paid as earned
- Total commission paid across six months
- $27,300
The guarantee cost $9,100 and stopped mattering at the point the rep stopped needing it, which is the sign it was sized correctly. Make the same guarantee recoverable and that $9,100 becomes a balance owed, with months 7 onward paying out only above whatever recovery schedule the plan sets.
A guarantee that ends on the same day full quota starts
The common design pays a full floor for six months and switches to a full quota with no floor in month seven. Two changes land in a single cycle: the safety net goes and the target rises. Reps who were tracking fine in month five resign in month eight, and the exit interview blames the quota when the cause was the step. Stagger them. End the guarantee a month or two after the ramped quota has already stepped up, so the rep absorbs one change at a time and the company can see whether the book supports a full number before the floor comes away.
- How is a minimum guarantee different from a draw?
- A guarantee is a floor: the rep receives at least that amount of commission for the period and keeps it. A draw is an advance against commission the rep is expected to earn later, and a recoverable draw has to be repaid out of future earnings. The distinction blurs because a recoverable guarantee behaves exactly like a draw, which is why the plan document has to say which one is on offer and how any shortfall is treated.
- How long should a minimum guarantee last?
- Long enough to cover one full sales cycle plus the lag before the first commission is paid. In transactional sales with a thirty-day cycle that is often three months. In enterprise sales with a nine-month cycle, six months is short, and reps regularly run out of protection before their first deal closes. Matching the guarantee to the measured cycle length of that specific team beats copying a period from another company.
Nearby terms
The long form lives in the guides: Plan templates.
Knowing the word is
the easy half
Commish pays minimum guarantee the way your plan describes it, shows the arithmetic on every line, and traces each payment back to the deal that earned it.