How Much Should I Pay a Software Sales Person?

As Alder Growth Partners has grown to serve more than 25 companies, while working with dozens of other CEOs and entrepreneurs informally, we're often asked: "how should we think about sales compensation in 2015?" 


For SaaS and enterprise software companies in Austin (or markets like it), we're currently seeing a three tier trend. The below data is anecdotal and somewhat subjective -- but seemingly representative (and in line with head-hunter surveys and experienced sales folks' feedback). And it fits trends that we've seen over more than 15 years in B2B software businesses:

* Inside Sales/Market Development ($40K/$40K): for a junior seller expected to close smaller deals (e.g. <$50K per year) and/or develop opportunities for senior sellers, we're generally seeing a $30K to $50K base with an opportunity to double the base via 100% quota achievement.
* Emerging Sales/Account Executive ($75K/$75K): for a sales person with 3-5+ years of experience, capable of running face-to-face meetings and closing medium-sized deals (e.g. $50K to $150K per year), compensation is often in the $60K to $90K base range, again with an opportunity to double the base at 100% quota.
* Senior Sales/Account Director ($120K/$120K): for a strategic, provocative revenue leader, equipped to drive larger deals (e.g. $150K+ per year), navigate complex organizations, and comfortably work with C-level buyers at larger enterprises, compensation is usually in the mid $200s -- or even higher in many cases, with unlimited upside that takes top performers into the $300s and beyond.

Of course, the compensation models above also need to have appropriate quota, commissions, accelerators and other elements to them. And different models make sense at various stages of companies, especially early when equity might be a bit looser, cash is tight and ASPs (average sales prices) might be lower. 

We'll tackle more thoughts on approaches and best practices in coming posts.

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