How much should you pay a salesperson?

Q: How much should you pay a salesperson?

Three ways to simplify the answer here, especially in the early days:

  • In the end, in base salary AND commission, most sales reps take home about 20%-25% of what they close in first year deal value. So if you model sums up to that or close, you are in the zone.
  • You have to pay a living wage. No one in sales wants to work just for the fun of it. This may mean in the early days you have to pay out more than 20% of the deal size of the initial deals.
  • You probably have to pay a competitive “OTE” (On Target Earnings), or base + bonus. Or else, they will do the same work at a company with a market OTE.

Back solve for these 3 points, and you’ll have the start of your first sales rep comp plan.

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Published on January 14, 2020

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