Essay · 12 min read

Simple Math to Set Up a Sales Team

David Sacks · Craft Ventures Free Intermediate

The clearest arithmetic anywhere on rep economics: the rule of 10 for quota against base, four months to productivity, draws during ramp, and why teams attain about 70 percent of quota capacity so you must plan over capacity.

  • Rule of 10: an AE's quota is 10x base salary, and the standard SaaS commission rate is 10 percent of ARR.
  • Pay a 50/50 base to variable split, then accelerate to 15 percent commission past quota.
  • Plan for a 4 month ramp and about 70 percent average team attainment, so carry excess quota capacity.
  • Set a manager's quota at 80 percent of their team's capacity; below 400K new ARR per AE, sales-led may not pencil.
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It answers 8 questions

  1. I have been handed a comp plan. How do I work out what I will actually earn?
  2. What do OTE, pay mix, accelerator, draw and clawback actually mean?
  3. I have been offered the first sales hire job at a startup. What should I check before I say yes?
  4. I am a founder writing my first sales comp plan. What is the simplest thing that works?
  5. What is a fair quota for my first rep when we have no history to go on?
  6. What should a new rep's first 90 days actually look like?
  7. How many reps should I hire next quarter, and in what order?
  8. How much should the whole GTM org cost, and how do I know when we are overspending?

Read with it

  1. The headcount question answered as arithmetic: revenue target divided by revenue per rep and capacity utilisation, with ramp... Everstage Article · 12 min read Sales Capacity Planning Everstage
  2. Written for Indian SaaS founders by the Everstage CEO, ex Freshworks. It gives the working numbers: quota period must be at... SaaSBoomi Article · 10 min read Getting the Quotas Right for Your SaaS Sales Teams Siva Rajamani
  3. From the Chennai-built comp platform that actually runs these plans for hundreds of companies. It gives the pay mix by role... Everstage Article · 18 min read SaaS Sales Compensation Guide: How to Design Scalable and Fair Plans Everstage
  4. Worked examples with real numbers for an SDR at 70:30, a CS role at 75:25 and a presales engineer at 80:20, each with quota,... Everstage Template · 15 min read Sales Compensation Structure: The Guide With Role-Based Templates Everstage
  5. The numbers you want when arguing about a plan: median commission around 11.5 percent of ACV, AE pay mix near 53:47, quota to... Everstage Report · 12 min read SaaS Sales Compensation Benchmarks: Trends and Best Practices Everstage
  6. Ten specific, named mistakes rather than principles, including hiring a VP of Sales too early and letting a bad rep linger past... SaaStr Podcast · 30 min listen SaaStr Podcast #379: The Top 10 Mistakes Founders Make When Hiring Their First Sales Team Jason Lemkin
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