How quotas usually get built

Nobody hands you the spreadsheet. Here's roughly what's in it.

Most reps have no idea how their number was made, and a lot of managers only know their half. I can't tell you your company's formula. Nobody outside finance can, and some years nobody inside can either. But most of them start from the same handful of things.

How a big company builds your number

At a company the size of AWS, Microsoft or Google, your quota is the last step of a long chain. It usually runs in this order:

1. The company number. Leadership commits to a growth target. Everything after this is that number, divided.
2. Capacity. Finance counts sellers: who's here, who's ramping, who's leaving, and what each seat is supposed to produce.
3. Territories. Accounts get carved up among the seats, including the empty ones.
4. Quotas. The number gets handed down through each layer of management until it reaches you.
5. The comp plan. Last, somebody decides what you get paid for hitting it.

Your territory and your number are usually settled before anybody asks you about either one.

Why the quotas add up to more than the plan

Planners over-assign. The quotas across a sales team typically total 20 to 30% more than the company actually needs, and more in enterprise, to cover the reps who miss, leave or ramp slowly. If your number feels like it's carrying somebody else's, it probably is.

Cloud quotas count consumption

At the cloud providers, a lot of quota is measured in what customers actually run, month after month, not what they sign. Microsoft, for one, ties its field incentives to Azure consumed revenue. A big commit nobody uses doesn't retire much quota, which is also why cloud multiples look enormous next to SaaS benchmarks.

The calendar matters

Amazon and Google plan on the calendar year. Microsoft's fiscal year runs July through June. Either way, next year's number is being built months before the year starts, which is the only time a manager can still change it.

Where the number usually comes from

• Last year's revenue, plus a growth rate somebody picked
• The corporate plan: what the company told the board, divided down
• Market assumptions: how big somebody thinks your segment is
• Headcount: the number gets split across however many reps are budgeted, whether the seats are filled or not
• Territory potential, when anybody bothered to size it
• Product priorities: the thing the company needs sold this year
• New business, often carried separately from renewals
• Renewals, which are either counted in your number or quietly aren't
• Management overlays: a little extra added at each level, just in case

That last one adds up. Every layer pads it a few percent, and by the time it reaches a rep, the number is carrying everybody's cushion.

Your boss may not be goaled on your number

This explains a lot of strange quotas. Your manager's boss might be measured on something else entirely: growth rate, new business, a strategic product, bookings, margin, market share, or what partners bring in. If they're paid on new logos and your territory is mostly renewals, your number is going to look odd from where you sit, and nobody will think to tell you why.

So ask. "What's our leader actually measured on this year?" is a fair question, and the answer tells you which parts of your quota will get attention and which won't.

What you can usually find out

• How your number compares to last year's actuals, yours and the team's
• Whether renewals are in it, and at what rate
• Whether a vacant territory's number got spread across everybody else
• Whether last year included one big deal the plan assumes will happen again
• What the comp plan pays extra for, which tells you what the company actually wants

Then decide

If the number holds up, build the plan. If it doesn't, bring the math. Quota Check tells you how your multiple compares, Quota Case builds the bridge from last year to this year, and Your quota is crazy. Now prove it. covers the conversation for managers, and this one is for reps. If the number isn't moving, here's what I'd do instead. The benchmarks are all on Quota by the numbers.