Dear SaaStr: What Would a Good Sales Comp Plan for a B2B SaaS Company with ACV ~$1,200 look like?

Q: What would a good Sales Comp Plan for a B2B SaaS Company with ACV ~$1,200 / ARPU ~$100 look like?

This is a pretty low price point for a sales-driven SaaS model, but it can be done. You do have to be ruthlessly efficient, however.

Roughly speaking, most SaaS sales comp plans end up being 10/10 plans. 10% of a deal paid out as base salary, 10% based out as bonus. 20% of the total deal size goes back to sales reps in base comp + salary.

How does that work in practice?

Well, $1,200 ARPU is low so you’re probably going to want to focus on entry-level sales professionals.

  • Let’s say you want $100k OTE (base+bonus) for them.  You might be able to get away with less in some cases, and some SaaS companies will pay more, even for relatively entry-level sales.
  • To make $100k OTE, they need to close $500k (they take home 20% total).
  • To close $500k, at a $1,200 ARPU, that’s 420 deals a year (!) or 35 a month.
  • For each deal, they’d take home say $120, and then need to close 35 each month to hit quota.
  • With say a 10% close rate, each rep would need 350 leads a month. With say 2.5 calls per closed deal, that would be close to 1,000 calls a month. Maybe 500 if the rep is good with their time and email. That’s 25–50 calls a day.

This can be done, but it takes a lot of inbound leads flowing to sales that can be closed in 1–2 calls or so.

Published on July 2, 2021

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