Enterprise AE Base Salaries: Setting Pay by City Tier, Not One Average

A national average blends expensive hub cities with cheaper secondary markets, so it overpays in the cheap ones and underpays in the expensive ones. If your recruiter quotes the same base to a candidate in a major coastal hub and a candidate in a much lower cost metro, you will lose the hub candidate to a competitor with a tighter, location aware range, and overpay the other hire relative to their own market. Neither outcome is what a founder setting the number actually wants.

Most companies pick from three models. A flat national rate is the simplest to administer and the easiest for reps to understand, but it is the least defensible once you are hiring in more than one or two markets. A tiered model groups metros into a handful of bands by cost of labor, which balances fairness against administrative overhead. A fully localized model prices every metro individually, which is the most precise but needs ongoing data and a real compensation function to maintain. Small teams usually start flat and move to tiers once hiring spans several cities.

Start from a public cost of labor index rather than guessing. Group the metros where you actually hire into tiers, with the highest cost hub cities at the top. Say your team is split between a major coastal hub and a remote hire in a much smaller metro: treating those two locations as equivalent ignores a real, measurable difference in what it costs each rep to live where they live. Keep the list short enough that a hiring manager can look it up in seconds, not a spreadsheet with fifty rows.

To build the tier list, work through these steps:

1. Pick a public cost of labor index as your reference instead of estimating from recruiter anecdotes or a single salary survey.
2. List the metros where you actually hire and place each one into a tier, with the highest cost hub cities at the top.
3. Assign every current and planned rep to a tier by actual work location, including remote hires, not by job label.
4. Set a base salary band for each tier, keeping the gaps large enough to matter but not so large they feel arbitrary.
5. Write the tier rules down and schedule a review at least once a year, since metros move between tiers over time.

The gap between tiers should be large enough to matter and small enough not to feel arbitrary to reps in cheaper markets. A common approach sets each lower tier at a modest discount to the one above it, with the discount narrowing as you move down the list so the bottom tier does not feel like a demotion. Document the reasoning, not just the resulting numbers, so a rep who asks why their offer differs from a peer's gets a real answer instead of a shrug.

Review the tier list on a fixed schedule, at least once a year, because metros migrate between tiers as remote work shifts where talent concentrates and as local rents and wages move. Watch for markets that quietly become more expensive as relocations push them up, and for hybrid arrangements where a rep splits time between two tiers. Decide your relocation policy before someone actually moves, not in the middle of that conversation.

Once base salary is tiered, the next question is whether on-target earnings should follow the same tiering, or whether the variable portion stays flat everywhere since it is tied to results rather than location. Most companies keep the commission target flat nationally, on the reasoning that a closed deal is worth the same to the business regardless of which city the rep who closed it happens to live in, while only the base reflects local cost of labor. Tiering both the base and the variable target compounds the pay gap between markets in a way that can feel punitive rather than fair, so if you do tier the variable portion at all, keep the spread noticeably smaller than the base spread.

However you land on this question, write the answer down alongside the tier list itself, since it comes up in nearly every offer negotiation once a candidate compares notes with a peer in a different market. Say a candidate in a lower tier asks why their total on-target earnings look smaller than a peer's in a higher tier: having a documented, consistent policy on whether that gap comes entirely from base, entirely from variable, or a blend of both lets a recruiter answer confidently instead of improvising a justification on the spot. Revisit this policy at the same time you revisit the tier list itself, since the right balance between base and variable tiering can shift as your team grows and as more candidates start comparing offers across locations before they sign.