Category

Series B Key Challenges

Revenue growth and predictability Build a Cost Effective Organization

Series B Team’s org

Sales

Market Practices

Minimum 4 times Sales Reps' Salary + Salary Taxes

Critical

⭐

❓

This KPI’s tells more about your sales team profitability.

ARR/Sales Salaries + Taxes

🟠 GOOD

Minimum 4x Sales Reps' Salary + Salary Taxes

If your sales rep costs 80k€ per year of gross salary, meaning 116k€ (adding in France 45% of taxes), it means that each sales rep should generate over 12 months 464k€ of ARR, when they are fully-ramped. - Stéphane, CEO @ AtScale

Two industry standards allow us to simplify greatly: - The standard commission rate for SaaS products is 10%. For example, closing a $100,000 ARR deal generates a $10,000 commission. - In constructing an OTE for an AE, a 50/50 split between base and variable compensation is typical. For an AE who’s hitting quota, their variable pay will equal their base salary. - Taken together, these standards generate a third rule: the typical quota will equal 10x base salary. I call this the Rule of 10. - From Simple Math to Set Up a Sales Team by David Sacks

From KeyBanc Capital Markets’ 2022 SaaS Survey:

Additional resources

How Much Should You Pay Your SaaS Startup's Sales People? by @ttunguz

How much should your startup pay its sales people? According to Pacific Crest’s Annual SaaS survey, 9% of a sales rep’s annual contract value. This figure doesn’t vary much on whether your startup’s salespeople are inside reps or outside/field sales reps. The table below computes the effective salary + commission of a sales reps as a function of average contract value and an estimated quota. The quota is an estimate based on deal velocity, how many deals a salesperson must close each year to attain quota.

tomtunguz.com