Q: How do some salespeople make millions?
A very few SaaS AEs can make $1m a year. Because they are (x) in the top 1% and (y) at a SaaS company closing tens of millions of new bookings or more. It’s not possible before a SaaS startup crosses $20m-$40m+ in ARR, because you probably have to close $3m-$5m or more in a year to take in a $1m commission.
But almost every sales-driven SaaS company at some point, maybe after $40m or $50m in ARR, and sometimes earlier, has their first sales rep that makes $1m+. At least once.
How? Well, as a rough rule, SaaS sales professionals take home about 20% of each deal in comp. Often, this is split 10%/10% by base and variable … this can vary. But ~20% all-in is average. More on that math here: https://www.saastr.com/how-much-can-you-really-spend-on-marketing/
And often, there are accelerators for the reps that close the most, and these accelerators usually are not capped aggressively in fast growing start-ups, if at all.
Now, imagine your “average” rep brings in $700k in bookings in a year, and takes home $140k (20%) all-in.
But one rep is really good at the big deals. She closes $4m in one year. And gets an accelerator to 25%. $4m x .25 = $1m in comp.
For that one AE that closes 6.5x more than the average one.
This is the way it should be.
She brought in another $3.25m on perhaps the same number of leads as the average rep. If she can perform that magic — she should keep a decent chunk of it. The company is still way, way ahead even after paying out that monster check. Especially if that customer stays a decade or longer.
The post Can You Make $1,000,000 a Year as a Sales Rep in SaaS? Yes. It’s Very Hard. But Not Impossible. appeared first on SaaStr.
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