Salary is only part of what it costs to add a salesperson. This free calculator (above) shows the fully loaded cost of hiring an SDR, BDR, or account executive, how long it takes to reach full capacity, and how much revenue the hire needs to produce to pay for itself. It uses your own numbers, and you don't need to enter an email to see the results.
What the calculator shows
- First-year investment. The fully loaded cost of the hire in their first 12 months, including variable pay, benefits, recruiting, tools, training, and management time.
- Time to full capacity. The months it takes to hire plus the months it takes to ramp.
- Revenue capacity. What the hire could produce in the first 12 months at your quota and attainment, adjusted for ramp.
- Break-even. The revenue and the number of deals needed to recover the investment at your gross margin.
- Investment efficiency. How much sales investment sits behind each dollar of expected revenue.
How to calculate the cost of hiring a salesperson
These are the formulas the calculator uses. Every input comes from you, and anything you leave blank is left out.
- Fully loaded first-year cost = base salary + target variable compensation + benefits and payroll taxes + recruiting + training and onboarding + sales technology and data + a share of the sales manager's cost + other costs, multiplied by the number of hires.
- Time to full capacity = months to hire + months to ramp.
- First-year revenue capacity = annual quota × number of hires × expected attainment × the share of the first 12 months the hire is productive. A straight-line 4-month ramp works out to 10 productive months out of 12.
- Break-even revenue = first-year cost ÷ gross margin.
- Break-even deals = break-even revenue ÷ average deal size, rounded up.
- Sales investment per $1 of revenue = first-year cost ÷ first-year revenue capacity.
A worked example: hiring two account executives
This example uses round numbers to show how the calculator works. They are example inputs, not typical figures, so replace them with your own.
The inputs
Example inputs for two account executives
| Input | Value |
|---|
| Number of hires | 2 account executives |
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| Base salary | $100,000 each |
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| Target variable compensation | $100,000 each |
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| Benefits and payroll taxes | 25% of base salary |
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| Recruiting | $10,000 per hire |
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| Training and onboarding | $5,000 per hire |
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| Sales tools and data | $8,000 per hire a year |
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| Sales manager | $200,000, supporting 8 reps |
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| Annual quota | $1,000,000 per rep |
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| Expected quota attainment | 75% |
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| Average deal size | $50,000 |
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| Gross margin | 70% |
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| Months to hire | 2 |
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| Months to ramp | 4, straight line |
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How the first-year cost adds up
Fully loaded first-year cost
| Cost | Per hire | Two hires |
|---|
| Base salary | $100,000 | $200,000 |
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| Target variable compensation | $100,000 | $200,000 |
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| Benefits and payroll taxes (25% of base) | $25,000 | $50,000 |
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| Recruiting | $10,000 | $20,000 |
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| Training and onboarding | $5,000 | $10,000 |
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| Sales tools and data | $8,000 | $16,000 |
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| Share of sales manager ($200,000 ÷ 8 reps) | $25,000 | $50,000 |
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| First-year investment | $273,000 | $546,000 |
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The results
Results for two account executives
| Result | Value | How it is calculated |
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| First-year investment | $546,000 | $273,000 × 2 hires |
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| Cost per hire | $273,000 | Sum of the cost lines above |
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| Time to full capacity | 6 months | 2 months to hire + 4 months to ramp |
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| First-12-month revenue capacity | $1,250,000 | $1,000,000 × 2 × 75% × 10 ÷ 12 |
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| Break-even revenue | $780,000 | $546,000 ÷ 70% |
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| Break-even deals | 16 | $780,000 ÷ $50,000 = 15.6, rounded up |
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| Sales investment per $1 of revenue | $0.44 | $546,000 ÷ $1,250,000 |
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The two base salaries total $200,000 and the first-year investment is $546,000. With a 6-month path to full capacity, the two hires need $780,000 in revenue, or 16 deals at $50,000 each, to recover it. That is about 62% of their first-year revenue capacity of $1,250,000.
A straight-line 4-month ramp counts as 2 productive months, so each rep is productive for 10 of the first 12 months.
Default assumptions in the calculator
Three fields start with a value so the calculator has something to work with. They are planning assumptions, not Revfinery benchmarks, and you can change each one.
Starting values
| Field | Starting value |
|---|
| Months to hire | 2 months |
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| Ramp time | 3 months, straight-line ramp |
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| Benefits and payroll taxes | 25% of base salary |
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| Every other field | Empty until you fill it in |
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Anything you leave blank is left out of the results. The worked example above uses a 4-month ramp in place of the 3-month starting value.
In-house or outsourced sales: how to decide
The calculator is neutral on this question, because cost is only one part of the decision.
Hiring internally may make sense when you have a proven sales motion, someone has the capacity to manage and coach the hire, you can support recruiting and ramp, and the need is permanent.
Outsourced or flexible capacity may make sense when speed matters, the sales motion needs additional support, you don't want to add permanent headcount yet, you need specialized capacity, or you want to test before building internally.
To compare the two, put your first-year investment and your time to full capacity next to an outsourced quote for the same period.
Revfinery offers outsourced BDR and AE support and direct placement. See how outsourced sales support works. If you are not sure whether the constraint is capacity or the sales system itself, the Sales Performance Diagnostic is the place to start.
Frequently asked questions
How much does it cost to hire a salesperson?
The fully loaded cost is the base salary plus target variable compensation, benefits and payroll taxes, recruiting, training, sales tools, and a share of management time. In the worked example above, an account executive with a $100,000 base salary costs about $273,000 in the first year once those items are included. Your own figure depends on your pay plan and your costs, which is what the calculator works out.
What is included in the fully loaded cost of a sales rep?
Ongoing costs are base salary, variable compensation, benefits and payroll taxes, sales technology and data, allocated management time, and any other annual costs. One-time costs are recruiting and training or onboarding. The calculator shows both, along with a monthly run rate.
How long does it take a new sales hire to become productive?
It depends on your sales cycle, your onboarding, and the role, so the calculator uses your own estimates. Time to full capacity is the months it takes to hire plus the months it takes to ramp. With 2 months to hire and a 4-month ramp, a new rep reaches full capacity about 6 months after you start the search.
How do you calculate the break-even point for a sales hire?
Divide the first-year investment by your gross margin to get the revenue needed to recover it. Then divide that revenue by your average deal size and round up to get the break-even number of deals. For example, a $546,000 investment at a 70% gross margin needs $780,000 in revenue, which is 16 deals at $50,000 each.
Is it cheaper to outsource SDRs than to hire in-house?
It depends on the price you are quoted and on what you would spend internally. A fair comparison puts the fully loaded in-house cost, including the months spent hiring and ramping, next to an outsourced quote for the same period. Outsourcing can make sense when speed matters or you are not ready to add permanent headcount. Hiring can make sense when the sales motion is proven and you have the capacity to manage the hire.
Is the calculator free, and do I need to enter my email?
Yes, it is free, and the results appear without an email address. The numbers you enter stay in your browser. Revfinery only sees anonymous usage information, such as the role selected and a broad cost range.
Not sure whether to hire, outsource, or fix the sales system first?
Talk to Revfinery or explore Outsourced Sales.
