Re:Simple Math to Set Up a Sales Team
by twic on Tuesday December 01, 2020 @05:32AM
(#25264052)
Look at it the other way round: the company is bearing a cost 10% of revenue just in commission to salespeople. If all salespeople are exactly meeting quota, then the total cost of sales is 20% of revenue. The same applies to their manager, at 2.5%, for a total of 25% of revenue. The remaining 75% has to pay for everyone else in the company, and external costs!
[ Parent
| on HN ]
It’s not 10% of revenue, it's 10% of the first year of ARR. So if the company is doubling revenue every year, it is 5% of revenue. Any slower growth, it's a lower percentage.
Re:Simple Math to Set Up a Sales Team
by kingnothing on Tuesday December 01, 2020 @01:52PM
(#25268441)
I've worked places that approach paying 100% of year 1 revenue to sales. We had a relatively cheap B2B SaaS product with a higher barrier to exit. It really depends on what the LTV of your customer is as to what percentage you should pay sales people.