So I wondered how many of us still pay sales reps in SF and NYC more than the rest of the country. Or put differently, pay reps outside of the top most expensive tech centers … less.
There are arguments on both sides on whether to pay reps the same everywhere across U.S. … or not:
- SF and NYC are much more expensive in terms of cost of living. State taxes alone in CA are the highest in the country. Versus zero or very low in other parts of the U.S.
- SF and NYC are the most competitive for sales talent. This is still true today, even with folks living everywhere.
- And importantly, SaaS sales teams have traditionally scaled using “lower cost” centers like Atlanta, Phoenix, Portland, etc. to find a way to more cost-effectively scale sales.
But …
- Shouldn’t you pay the best the same, wherever they are?
- If it’s an inside role primarily on Zoom, and the rep can hit 100%+ of quota from Las Vegas, or Miami, or Tulum? Why pay them less?
It’s complicated.
Still, I wondered in a time when almost everyone at least is hybrid, and so many are distributed … do sales reps outside of SF and NYC still get paid less? Or put differently, are sales reps in SF and NYC still paid more?
The answer is Yes.
65% of you still pay reps in SF and NYC more.
Personally I’m a bit torn here. At SaaStr itself, we pay everyone on our tiny sales team the same. But .. we’re tiny.
On the other hand, if you can’t get any economies of scale in U.S. sales … many SaaS companies just leave it partially. Most of my highest growing portfolio companies at SaaStr Fund have far more sales resources in Latin America, Central Europe, and more than they used to at the same given ARR. They can’t afford to scale with U.S. salaries. They’ve given up on using other parts of the U.S. to scale-up lower cost sales …. and left it instead to find those resources.
In any event, most of you are still not fully “normalizing” sales comp across the U.S.