First Year Hard Dollar Expense, Direct Hire, Field Sales
The below constitutes average base salary and other hard costs only and does not include commissions or assume any sales revenues and is modeled on a typical 115/245 on-target-earnings (OTE) and 135/285 OTE plans respectively.  Below non-recoverable draw reflects first quarter of guaranteed incentive comp.  Top reps, Director, or VP levels will expect two quarters guaranteed, or more depending on how early in the product development cycle you hire them.  Soft costs are additional to the below figures, conservatively an additional 10-12%.

       Regional Sales Representative (major market, NYC, etc)

Base Salary   $ 120,000.00
Recruiting, fees (25%)           30,000.00
N/R Draw ramp                       30,000.00
Benefits (35%)                42,000.00

Hard Cost Totals $ 222,000.00** First year
                      ($141,000** in First 6 months)

     RVP Sales/Director level, Northeast  

Base Salary     $ 145,000.00
Recruiting, fees (25%)            36,000.00
N/R Draw ramp                        40,000.00
Benefits (35%)                 50,000.00

Hard Cost Totals $ 271,000.00** First year
                                                               ($173,000** in First 6 months)

** Soft costs, ongoing HR support, training, office expenses, potential termination are additional 10-12%



”...The intrinsic costs of a "mis-hire" also are high—training time, lost revenue, confusion among customers, possible bad-mouthing in your industry, and even low morale among the remaining employees. Your budget will feel the biggest crunch, though......Experts predict a mis-hire costs a company three to six times that person's annual compensation."

Maureen Hrehocik
Published HR Professional
excerpt from Sales and Marketing Magazine

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"So what’s the right way to approach capacity planning for a new-product launch? Start out with very low assumptions about expected revenue per salesperson, and increase these expectations gradually, quarter by quarter.  Anticipate that during the initiation phase, reps will not generate enough revenue to cover their total costs. Given that the marginal contribution per rep will therefore be negative in this phase, hiring more people will merely deteriorate your cash position. Only when you see the productivity of existing reps approaching the point where they cover their total costs should you consider expanding the sales force...  ...(this) will prevent you from wasting critical funds in the early  stages."   
                                        
                         - Mark Leslie and Charles A. Holloway 
                                                                             from "The Sales Learning Curve"                                                                                    
"Say a software company pays its average sales rep $200,000 per year (base plus commission), and a sales rep incurs $50,000 per year in T&E expenses plus $80,000 in administrative and operating expenses. That totals $330,000 in direct costs per rep. To that must be added indirect costs (such as sales support and management personnel), which typically adds as much as 50% of the direct cost per rep, in this case $165,000. That brings the total cost per rep to $495,000 per year."

Mark Leslie and Charles A. Holloway from "The Sales Learning Curve"


"Travel expenses alone for California-based start-up and early-stage companies justify a local northeast resource..." 
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