Staffing Sales Hire Break-Even
How much incremental GP does a new sales hire need to generate to break even, and when?
The ramp extension uses the month-by-month GP you forecast; treat the payback month as a scenario result, not a guarantee.
Why this comes up
A new sales hire (business development, account executive, whatever the title) costs real loaded salary before they generate a single dollar of new GP, and most of what they do generate is offset by commission. "Are they worth it" isn't answerable from gut feel alone, it needs a specific GP figure the hire has to clear just to cover their own loaded cost, and ideally a month-by-month view of whether they're actually ramping toward it.
How we calculated this
Required Incremental GP = Loaded Fixed Sales Cost / (1 - Commission %) Ramp extension: Net Contribution per Month = (Generated GP x (1 - Commission %)) - Monthly Fixed Cost, accumulated month over month
Worked example, using the calculator's own defaults: $90,000 loaded fixed sales cost and a 15% commission rate.
Required incremental GP = 90,000 / (1 - 0.15) = 90,000 / 0.85 = $105,882
The hire needs to generate $105,882 in new GP annually, not $90,000, because 15% of every dollar of GP generated goes back out as commission before any of it counts toward covering the loaded fixed cost.
What this means
- Required incremental GP is always higher than loaded fixed cost alone whenever commission is paid on top of it, the higher the commission rate, the bigger that gap.
- This required-GP figure is an annual (or whatever period you enter fixed cost as) threshold; turn on the ramp extension to see whether a realistic month-by-month generation curve actually clears it within a reasonable timeframe, not just in theory.
- A hire who clears required incremental GP eventually but takes an unusually long ramp may still be a net loss for a period, weigh the ramp length against how long the agency can carry that cost.
Limitations
The ramp extension uses the month-by-month GP you forecast; treat the payback month as a scenario result, not a guarantee. It also doesn't account for a sales hire's effect on existing recruiter or delivery capacity, new sales volume from a successful hire still needs somewhere to go, check that capacity separately before assuming every dollar of generated GP converts cleanly.
Common mistakes
- Comparing a candidate's expected GP generation against loaded fixed cost directly, without dividing by (1 - commission %) first.
- Using an optimistic best-case ramp curve in the ramp extension instead of a realistic or conservative one, which overstates how quickly the hire pays back.
- Ignoring whether recruiting and delivery capacity can actually absorb the new business a successful sales hire would generate.
Frequently asked questions
What should I put in "loaded fixed sales cost"?
Base salary plus payroll taxes, benefits, and any other fixed cost of employing the hire, not including commission, which is handled separately as a percentage.
Should I use the ramp extension for every hire?
It's most useful when you have or can estimate a realistic month-by-month generation curve; if you don't, the simple required-GP figure alone is still a valid check on the hire's economics.
How does this compare to a back-office hire?
A back-office hire is evaluated on recovered time, capacity, and enabled GP rather than direct GP generation, see Back-Office Hire Break-Even for that comparison basis.