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An SDR is a dynamic role, and as such, often the take-home pay isn’t as consistent as it might be for other positions. While SDRs do have a salary, a good amount of their compensation typically comes from commissions based on the number of appointments they set. The exact breakdown of base compensation and commissions varies based on the company and the role, but here are some things to consider when you’re designing your SDR compensation package:
Use Local and Industry Data
On average, an SDR’s base salary is 64% of compensation, with 36% being left to commission and other variable income sources, like bonuses. However, these averages may be different depending on your area and industry. For instance, compare the salaries of SDRs in the aerospace industry to those in the travel and hotel industry.
Rates will also vary based on location. For instance, here are the average salaries for SDRs in select cities throughout the US:
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When you’re designing your package, use our sales compensation plan for startups to make sure you’re hitting the right targets for your team.
Action tip: find 2 or 3 companies in your industry and check glassdoor and other sites for SDR compensation data. If you have connections to other companies, ask directly about their compensation packages.
Determine Your OTE
On-target earning, or OTE, is how much you would pay your SDR if they were to meet their sales goals. This is a combination of their base salary and expected commissions. Determining your OTE will fit into your broader understanding of your revenue targets.
In essence, make sure you can actually afford to pay your SDRs if they meet or reasonably exceed their goals. Our revenue model calculator can help you figure out what you need to aim for to be able to keep up with even the most efficient SDR team.
Action tip: draw up a hypothetical budget for a rockstar team. Can you afford to compensate your SDRs if they crush their targets? And what can you do to help your AEs close deals so these appointments lead to revenue?
Adjust Commission Rates to Motivate Your SDRs
Commissions help your SDRs feel motivated to meet their goals. However, if commissions are too much of the compensation package, sales-enabling activities that help the funnel may suffer, such as customer research, nurturing relationships, and finding leads. In this case, may be too focused on setting appointments only and won’t feel they have the time to nurture the top of the sales funnel as much. It may actually harm their success rates as well, as leads may feel rushed or pressured.
On the other hand, if commissions are too low, SDRs may lack sufficient motivation to meet their quotas. Low commission rates can lead to spending too much time in the early stages of the funnel and may not provide the incentive to move forward. In addition, morale may suffer because set appointments don’t feel like wins. Be sure to track your SDR’s progress to make sure your commissions model fits their activities.
Action tip: talk to other industry leaders, and look for those who fall outside the averages. If an SDR at one company is being paid mostly in commissions, how does that compare to another company where commissions are low? Can you find patterns that may be leading to these decisions?
Research to Find the Best Rates
Because an SDR’s salary has so many variables, it’s important to do your homework before setting your compensation package in stone. Be sure to consider:
- Typical salaries for this position in your industry and location
- Your company’s OTE and your revenue pipeline
- The motivating factor of your commission-to-base-salary balance
For more personalized help designing the best SDR salary package for your team, and for any help filling that team with rockstar talent, reach out to us today.
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