Q14 / REVENUE SYSTEMS
Problem 13
How do I pay people I can't afford?
Make the numbers make sense.
Build a quota a rep can understand. See what the hire costs, what it takes to pay back, and where the plan breaks before you make the offer.
- Time: 5 MIN
- Who: SOLO
- Stage: STAGE 2
- Access: FREE
NO SUBMIT BUTTON | NO EMAIL GATE | CHANGE ANYTHING. SEE IT MOVE.
Build my comp plan
The short answer
How do I set a quota for my first sales hire? Set quota at about 5x the rep's OTE (on-target earnings), split OTE 50/50 between base and commission, and pay commission pot / quota on every £1 of new ARR. £100k OTE = £500k quota = 10p per £1. Keep it uncapped, reset it each quarter, and build in a ramp.
How it works
- Enter OTE, average deal size and sales cycle.
- Adjust the defaults if you need to: split, ramp, guarantee, accelerator.
- See the 12-month plan, what the rep costs, payback month and whether a sales hire even makes sense at your deal size.
Worked example
£100k OTE, £10k deals, 2-month sales cycle. Quota £500k, or 4.2 deals a month at full speed. With a 3-month ramp the year-1 target is £437,500. The rep costs £115k including on-costs and pays back in month 8.
FAQ
Should I cap commission?
No. Your best salespeople should be the best paid people in the company.
Can I afford a sales rep at my deal size?
If a rep needs more than ~15 deals a month to hit quota, it's a self-serve or marketing problem, not a sales hire.
Pay on signature or cash?
Cash-rich: signature. Cash-poor: cash collected.
From the book
Problem 13 - How do I pay people I can't afford?
Use this next
Build my comp plan