Dear SaaStr: What Percentage of Software Sales Reps Have Earned Over $1m a Year?
It’s rare and it’s tough in SaaS as a sales rep to earn a fairly stunning $1,000,000 a year.
But … it’s not impossible.
I remember the first time I saw a rep make $1m. I was in the HQ of a well-known SaaS company just passing $100m in ARR. The rep closed his second multi-million dollar, multi-year deal — of the year. The whole management team cheered. He was the first one to hit that milestone.
You can back into the math:
- Assume a 10% commission rate, maybe 15%. I.e., a standard 10/10 plan. But, there may well be accelerators.
- That means, to make $1m, an AE would have to close $7m-$10m in net new business in a single year. That’s a lot!
- But it could maybe be $5m if there is more generous comp plan in the earlier days. And it might also be on TCV (total contract value), i.e. on say a 3-year deal, especially if all the cash is paid upfront.
- So closing $5m in TCV is hard, really hard. But once the deal size starts to hit $250k, $500k+ a year … and especially as you sign multi-year deals … you can see how to get there.
- Still, you need enough big deals for this math to work. So typically it gets hard until a startup starts to cross $40m-$50m ARR … there just isn’t that much total net new revenue to close, that one AE alone can close $5m-$10m of it.
But as you pass $50m and then $100m in ARR, there probably is room for 1–2 AEs to make that much, possibly more if you are doing really big deals, and much more as you cross $200m, $400m, etc in ARR. 🙂
It’s just really hard in the earlier days.
Still, every SaaS company I’ve been around that has gotten into that zone and does more enterprise sales has the day when one rep finally brings home a $1m payday. It’s often through a big multi-year deal or two, like above. Close say, a huge, $2m deal for 3 years, that’s a $6m contract … that alone could get you a $1m payday if the commission is relatively high. Close two or three and you’re there.
But the company / startup has to get big enough to support that sort of deal. And you have to be the best rep at the company at closing them. Maybe 1–2% can do it. Which makes intuitive sense. And you need to be one of those reps that just closes so much more than the rest. More on that here.
Personally, I’ve now worked with 4 sales execs who made $1m a year at least once. So it’s rare. It takes someone special — and in a special situation. It takes both. But it can be done.
P.S. Don’t spend it all.
(an updated SaaStr Classic answer)