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Look at it the other way round: the company is bearing a cost 10% of revenue just in commission to salespeople. If all salespeople are exactly meeting quota, th
by twic 6y ago
Look at it the other way round: the company is bearing a cost 10% of revenue just in commission to salespeople. If all salespeople are exactly meeting quota, then the total cost of sales is 20% of revenue. The same applies to their manager, at 2.5%, for a total of 25% of revenue. The remaining 75% has to pay for everyone else in the company, and external costs!
- jjmellon 6y agoIt’s not 10% of revenue, it's 10% of the first year of ARR. So if the company is doubling revenue every year, it is 5% of revenue. Any slower growth, it's a lower percentage.
- kingnothing 6y agoI've worked places that approach paying 100% of year 1 revenue to sales. We had a relatively cheap B2B SaaS product with a higher barrier to exit. It really depends on what the LTV of your customer is as to what percentage you should pay sales people.