Q: Dear SaaStr: What Would Be a Fair OTE for a VP Sales With a $1M quota?
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Let me step back. I don’t think it makes any sense for a VP of Sales to have a $1m quota. Why?
- A “real” VP of Sales should not have an individual quota. At least not for long. She should have a quota for a team she is building. More here: Should Your VP Sales Start Off as a Player-Coach? | SaaStr
- You probably aren’t ready for a real VP of Sales until $1m ARR or so … and then her job is to take you to $2m, $3m, $4m or more in the coming year and years. With a team that she builds. So that team quota should be much higher. More here: The 48 Types of VP Sales. Make Deadly Sure You Hire the Right One. | SaaStr
So let’s back up.
- A real VP of Sales probably is going to have an ARR/bookings quota for the entire year. I.e., if you want to hit $3m ARR or $2m in new bookings by 12/31 of next year, that’s her “quota”.
- Then, back into an appropriate comp plan to hit it. If she needs to make $250k for it to work, then perhaps the comp plan is 125k base / 125k bonus paid out for hitting $3m ARR by next year.
- And importantly, note you are going to have to pay this OTE on top of what you pay the reps themselves. Yes, sales is going to get more expensive as you scale. A lot more expensive.
(an updated SaaStr Classic answer)