Simple Math to Set Up a Sales Team

Let’s say you’re a SaaS founder who’s looking to build a sales team for the first time. How do you structure quotas and compensation for the initial sales reps and their manager? Oftentimes, the biggest hurdle in hiring the first sales rep is not knowing how to incentivize them. This post provides simple rules that you can use to set up a sales team. Structured properly, the process is surprisingly mathematical.

Individual Plans

Let’s start with the sales plan for an individual sales rep, or “account executive” (AE). The key elements of an AE sales plan are:

• Base Salary; 
• Quota; 
• Commission Rate; 
• Variable Pay (Quota times Commission Rate); and 
• OTE (“on-target earnings”), the sum of the AE’s Base Salary and Variable Pay. 

This sounds like a lot of variables, but two industry standards allow us to simplify greatly:  read more