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1 | Saas Sales Staffing Model from Founding Sales Book | https://twitter.com/foundingsales | ||||||||||||||||||||||||
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3 | This is a Saas Sales Staffing growth model I put together for one of the companies I advise. It's based on experience in scaling our team at TalentBin. It's not perfect, but I tried to abstract it enough such that you can fit it to the realities of a variety of go to markets. There may be bugs in it. I haven't yet tested it by hiring 50 sales reps in 12 months. ; ) Hit File>Make a Copy to create your own, and you can start hacking on it. Seriously, if you catch a bug, hit me at petekazanjy@stanfordalumni.org and I'll fix it. THANKS! As you can see, once you've hit product-market fit, the one thing you can do to grow ARR, and by extension, enterprise value, is by successfully hiring, onboarding, and getting successful incremental sales staff. Imagine raising that next round at $10m ARR instead of $6m ARR? Or having a brass tacks convo with that corp dev staffer about what your "yeah, we'll consider that" number is. The higher your ARR, the better. | |||||||||||||||||||||||||
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6 | Variables | Inside sales-style (smaller deals, faster cycles, lower win rate) | ||||||||||||||||||||||||
7 | Average Contract Value | $15,000 | Your average contract value will modify how much revenue your AEs can book per month. This will be modified by your pricing crossed with the realities of the level of competition in your market. | Yellow Cells are variables that you can change to fit your current go to market realities. Don't change non-yellow cell unless you know what you're doing ; ) | ||||||||||||||||||||||
8 | Win Rate | 20% | Your win rate will also modify how much revenue your AEs book per month. It will be modified by the maturity of your solution, its go to market, and level of competition in deals. | |||||||||||||||||||||||
9 | New Opps Per Week | 5 | The number of Opps that your AEs can handle per week (while still leaving time for pipeline management) gives a sense of funnel throughput. It is modified by how long a demo takes, if it has to be done outside or can be done via telepresence, and length of deal cycle. This number is also used for how many Opps an SE can handle in a week. | |||||||||||||||||||||||
10 | Renewal Rate | 90% | This model assumes 12 month contracts. This is the percentage of revenue that chooses to renew at the end of its 12 month contract. Also, because I'm lazy, I haven't added in the Accont Manager headcount cost associated with managing existing ARR. That's a todo! But if you want to hack on this, an AM should be able to manage $1m-$1.5m in business or so (depending on ACV - customer count per AM is what is more the constraint.) | |||||||||||||||||||||||
11 | Implied Monthly Unit Wins | $60,000 | The amount of bookings that should derive from a "unit" of revenue production - e.g. 1 SDR + 2 AEs. Or 1 SDR + 1 AE. Or 1 AE. | |||||||||||||||||||||||
12 | Implied Unit Sales Cost | $12,000 | The amount of your monthly bookings you'd be ok spending on cost of sales (related to cost of sales target percentage below) | |||||||||||||||||||||||
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14 | Monthly OTE | Annualized | ||||||||||||||||||||||||
15 | Implied AE Per Month (Fully burdened) | $7,500 | $6,000 | $72,000 | Note that what you can pay your AEs is an outcome of what the components of your GTM look like. If you can get a better deal, great. But paying above this will hurt margins. | |||||||||||||||||||||
16 | Implied SDR Cost (Fully burdened) | $3,300 | $2,640 | $31,680 | Note that what you can pay your SDRs is an outcome of what the components of your GTM look like. If you can get a better deal, great. But paying above this will hurt margins. | |||||||||||||||||||||
17 | Implied SE Cost (Fully burdened) | $5,625 | $4,500 | $54,000 | Used Glassdoor information to target the cost of an SE in relation to a standard AE. Looks to be ~75% | |||||||||||||||||||||
18 | Implied Management Cost | $1,200 | You may not encounter management cost until you get to 10 or 20 total reps (AEs+SDRs), depending on what your founding team looks like (can they manage the team?). But you need to budget for it. | |||||||||||||||||||||||
19 | AE Class Size | 3 | This is how many AEs you think you can onboard in a given class such that they all stick (this may be a failing of this model, as it doesn't have AE attrition). | |||||||||||||||||||||||
20 | SDR to AE Ratio | 0.5 | This is the ratio of SDRs to AEs you want to have. This is typically based on how many SDRs are needed to keep an AE calendar full weekly. The number of demos that an SDR can book per week is usually the result of how difficult prospects are to contact, engage, and book demos with. Ideally this would be linked to AE Opps to week, but I haven't abstracted the model to handle that. | |||||||||||||||||||||||
21 | SE Support Deal Ratio | 10% | The proportion of Opportunities that need SE involvement | |||||||||||||||||||||||
22 | Target Cost of Sales | 20% | This is the proportion of your bookings that you are willing to allocate to sales salary and commissions. Note that this is distributed across AE, SDR, and sales management overhead. | |||||||||||||||||||||||
23 | Sales Management Overhead | 10% | How much you want to allocate to management overhead. | These should add up to 100% (I know, I should have them linked), but this proportion feels right. AE base will typically land at 100% of what an SDR's OTE is. | ||||||||||||||||||||||
24 | AE Cost of Sales Proportion | 63% | How much of your cost of sales you want to allocate to AEs | |||||||||||||||||||||||
25 | SDR Cost of Sales Proportion | 28% | How much of your cost of sales you want to allocate to SDRs. | |||||||||||||||||||||||
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28 | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | Month 13 | Month 14 | Month 15 | Month 16 | Month 17 | Month 18 | Month 19 | Month 20 | Month 21 | Month 22 | Month 23 | Month 24 | ||
29 | Bookings Model | |||||||||||||||||||||||||
30 | Ramped AEs | 1 | 1 | 1 | 4 | 4 | 4 | 7 | 7 | 7 | 10 | 10 | 10 | 13 | 13 | 13 | 16 | 16 | 16 | 19 | 19 | 19 | 22 | 22 | 22 | |
31 | Opps Executed | 20 | 20 | 20 | 80 | 80 | 80 | 140 | 140 | 140 | 200 | 200 | 200 | 260 | 260 | 260 | 320 | 320 | 320 | 380 | 380 | 380 | 440 | 440 | 440 | |
32 | Wins | 4 | 4 | 4 | 16 | 16 | 16 | 28 | 28 | 28 | 40 | 40 | 40 | 52 | 52 | 52 | 64 | 64 | 64 | 76 | 76 | 76 | 88 | 88 | 88 | |
33 | Ramped AE Bookings | $60,000 | $60,000 | $60,000 | $240,000 | $240,000 | $240,000 | $420,000 | $420,000 | $420,000 | $600,000 | $600,000 | $600,000 | $780,000 | $780,000 | $780,000 | $960,000 | $960,000 | $960,000 | $1,140,000 | $1,140,000 | $1,140,000 | $1,320,000 | $1,320,000 | $1,320,000 | |
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35 | Ramping AEs | 3 | 3 | 3 | 3 | 3 | 3 | 3 | 3 | 3 | 3 | 3 | 3 | 3 | 3 | 3 | 3 | 3 | 3 | 3 | 3 | 3 | 3 | 3 | 3 | |
36 | Opps Executed | 60 | 60 | 60 | 60 | 60 | 60 | 60 | 60 | 60 | 60 | 60 | 60 | 60 | 60 | 60 | 60 | 60 | 60 | 60 | 60 | 60 | 60 | 60 | 60 | |
37 | Onboarding Efficiency | 0% | 33% | 66% | 0% | 33% | 66% | 0% | 33% | 66% | 0% | 33% | 66% | 0% | 33% | 66% | 0% | 33% | 66% | 0% | 33% | 66% | 0% | 33% | 66% | |
38 | Wins | 0 | 3.96 | 7.92 | 0 | 3.96 | 7.92 | 0 | 3.96 | 7.92 | 0 | 3.96 | 7.92 | 0 | 3.96 | 7.92 | 0 | 3.96 | 7.92 | 0 | 3.96 | 7.92 | 0 | 3.96 | 7.92 | |
39 | Ramping AE Bookings | $0 | $59,400 | $118,800 | $0 | $59,400 | $118,800 | $0 | $59,400 | $118,800 | $0 | $59,400 | $118,800 | $0 | $59,400 | $118,800 | $0 | $59,400 | $118,800 | $0 | $59,400 | $118,800 | $0 | $59,400 | $118,800 | |
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41 | # of SDRs (Supporting both ramped and ramping AEs) | 2 | 2 | 2 | 4 | 4 | 4 | 5 | 5 | 5 | 7 | 7 | 7 | 8 | 8 | 8 | 10 | 10 | 10 | 11 | 11 | 11 | 13 | 13 | 13 | |
42 | # of SEs (Supporting both ramped and ramping AEs) | 0 | 0 | 0 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 3 | 3 | 3 | |
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44 | Total Sales Staff | 6 | 6 | 6 | 12 | 12 | 12 | 16 | 16 | 16 | 21 | 21 | 21 | 26 | 26 | 26 | 31 | 31 | 31 | 35 | 35 | 35 | 41 | 41 | 41 | |
45 | Total Monthly New Bookings | $60,000 | $119,400 | $178,800 | $240,000 | $299,400 | $358,800 | $420,000 | $479,400 | $538,800 | $600,000 | $659,400 | $718,800 | $780,000 | $839,400 | $898,800 | $960,000 | $1,019,400 | $1,078,800 | $1,140,000 | $1,199,400 | $1,258,800 | $1,320,000 | $1,379,400 | $1,438,800 | |
46 | Total Monthly Renewal Bookings | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | $54,000 | $107,460 | $160,920 | $216,000 | $269,460 | $322,920 | $378,000 | $431,460 | $484,920 | $540,000 | $593,460 | $695,520 | $798,714 | |
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48 | Total Monthly Bookings | $60,000 | $119,400 | $178,800 | $240,000 | $299,400 | $358,800 | $420,000 | $479,400 | $538,800 | $600,000 | $659,400 | $772,800 | $887,460 | $1,000,320 | $1,114,800 | $1,229,460 | $1,342,320 | $1,456,800 | $1,571,460 | $1,684,320 | $1,798,800 | $1,913,460 | $2,074,920 | $2,237,514 | |
49 | Forward ARR RR | $720,000 | $1,432,800 | $2,145,600 | $2,880,000 | $3,592,800 | $4,305,600 | $5,040,000 | $5,752,800 | $6,465,600 | $7,200,000 | $7,912,800 | $9,273,600 | $10,649,520 | $12,003,840 | $13,377,600 | $14,753,520 | $16,107,840 | $17,481,600 | $18,857,520 | $20,211,840 | $21,585,600 | $22,961,520 | $24,899,040 | $26,850,168 | |
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51 | Aggregate Bookings to Date | $60,000 | $179,400 | $358,200 | $598,200 | $897,600 | $1,256,400 | $1,676,400 | $2,155,800 | $2,694,600 | $3,294,600 | $3,954,000 | $4,726,800 | $5,614,260 | $6,614,580 | $7,729,380 | $8,958,840 | $10,301,160 | $11,757,960 | $13,329,420 | $15,013,740 | $16,812,540 | $18,726,000 | $20,800,920 | $23,038,434 | |
52 | Cost Model | |||||||||||||||||||||||||
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54 | AE Salary Expense | $30,000 | $30,000 | $30,000 | $52,500 | $52,500 | $52,500 | $75,000 | $75,000 | $75,000 | $97,500 | $97,500 | $97,500 | $120,000 | $120,000 | $120,000 | $142,500 | $142,500 | $142,500 | $165,000 | $165,000 | $165,000 | $187,500 | $187,500 | $187,500 | |
55 | SDR Salary Expense | $6,600 | $6,600 | $6,600 | $13,200 | $13,200 | $13,200 | $16,500 | $16,500 | $16,500 | $23,100 | $23,100 | $23,100 | $26,400 | $26,400 | $26,400 | $33,000 | $33,000 | $33,000 | $36,300 | $36,300 | $36,300 | $42,900 | $42,900 | $42,900 | |
56 | SE Salary Expense | $0 | $0 | $0 | $5,625 | $5,625 | $5,625 | $5,625 | $5,625 | $5,625 | $5,625 | $5,625 | $5,625 | $11,250 | $11,250 | $11,250 | $11,250 | $11,250 | $11,250 | $11,250 | $11,250 | $11,250 | $16,875 | $16,875 | $16,875 | |
57 | Sales Management Addendum | $3,660 | $3,660 | $3,660 | $6,570 | $6,570 | $6,570 | $9,150 | $9,150 | $9,150 | $12,060 | $12,060 | $12,060 | $14,640 | $14,640 | $14,640 | $17,550 | $17,550 | $17,550 | $20,130 | $20,130 | $20,130 | $23,040 | $23,040 | $23,040 | |
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59 | Total Sales Salary Expense | $40,260 | $40,260 | $40,260 | $77,895 | $77,895 | $77,895 | $106,275 | $106,275 | $106,275 | $138,285 | $138,285 | $138,285 | $172,290 | $172,290 | $172,290 | $204,300 | $204,300 | $204,300 | $232,680 | $232,680 | $232,680 | $270,315 | $270,315 | $270,315 | |
60 | Total Cost of New Sales | 67.10% | 33.72% | 22.52% | 32.46% | 26.02% | 21.71% | 25.30% | 22.17% | 19.72% | 23.05% | 20.97% | 19.24% | 22.09% | 20.53% | 19.17% | 21.28% | 20.04% | 18.94% | 20.41% | 19.40% | 18.48% | 20.48% | 19.60% | 18.79% | |
61 | Sales Contribution Margin | $19,740 | $79,140 | $138,540 | $162,105 | $221,505 | $280,905 | $313,725 | $373,125 | $432,525 | $461,715 | $521,115 | $580,515 | $607,710 | $667,110 | $726,510 | $755,700 | $815,100 | $874,500 | $907,320 | $966,720 | $1,026,120 | $1,049,685 | $1,109,085 | $1,168,485 | |
62 | Aggregate Contibution Margin | $19,740 | $98,880 | $237,420 | $399,525 | $621,030 | $901,935 | $1,215,660 | $1,588,785 | $2,021,310 | $2,483,025 | $3,004,140 | $3,584,655 | $4,192,365 | $4,859,475 | $5,585,985 | $6,341,685 | $7,156,785 | $8,031,285 | $8,938,605 | $9,905,325 | $10,931,445 | $11,981,130 | $13,090,215 | $14,258,700 | |
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