Another finance guy telling hardworking sales reps that they are overpaid, right?

Well, kind of… but not all of you. The bad reps are obviously overpaid, the mediocre ones are sneakily overpaid, and the great ones are just right (maybe sometimes underpaid).

The question to answer is, “Are sales reps overpaid or are they highly paid?”

There is a major difference. The company (and the CFO) wants to keep the best (highly paid) sales reps and get rid of the overpaid sales reps that are ruining GTM efficiency.

The best sales reps should make high 6-figures (maybe sometimes 7-figures?) and be the highest compensated employees at the company (on a cash basis). But…I have also seen sales reps get paid WAY too much relative to the economics of the deal they close. It’s the CFO’s responsibility to make sure comp plans and deal economics make financial sense.

Below is how I determine if a sales rep is overpaid.

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The general advice is that the quota:OTE ratio should be around 4-6x. This means if a sales rep hits quota then they will create 4-6x more revenue than their total compensation.

This lines up with recent ICONIQ data as well. Segmenting the data based on customers and potentially other factors is also important.

Is a 4-6x ratio still good in the world of AI?

Maybe…But maybe not. You need to understand more than just the simple benchmarks to know (keep reading).

Having a good quota:OTE ratio is great but it means nothing if attainment is low. You need to also review actual attainment vs. OTE.

Below is ICONIQ’s attainment data by segment and growth bucket (high-growth vs everyone else).

Not only do high-growth companies have higher quota:OTEs, but they generally have higher attainment as well.

Example:

Let’s look at how attainment impacts sales efficiency with an example of two different companies with 4 sales reps. Below are the sales reps’ OTE and quota.

Company A has a low average attainment of 41%. The far right column shows the total sales rep cost per $1 of ARR closed (e.g. it costs $0.35 in payroll costs for Sales Rep 1 to close $1 of ARR).

While Company B has a great average attainment of 81%. As you can see, the cost per $1 of ARR is much lower.

Company B is acquiring ARR 34% more efficiently than Company A!

This is why your best reps are SO valuable. Not only do they close better deals, but the reps with high attainment are a lot more efficient because the incremental dollars only cover commissions (versus base salary + commissions).

Most folks fail to realize how much more efficient great reps can be…

What’s the sweet spot for attainment?

I think something around 70% hitting quota is a good target. It’s hard to hit targets but achievable and there is a high average attainment. Culture tanks if attainment is less than 50%.

Looking at commission rates is also helpful to think about.

For every $1 of revenue brought in, how much are we paying sales reps?

The data below from ICONIQ is consistent with my experience.

But…an 18% commission rate (on the high end) seems dangerously high. So unless the “GTM pod” (see below) is REALLY small, those unit economics will be hard to make sense.

OTE = “on target earnings” is what a sales rep earns if they hit their sales target at 100% (includes base salary + commission)

Below is ICONIQ’s data on the OTE split for AEs based on segment and ARR scale.

OTEs are still steadily increasing for sales reps (up between 9% and 19% over the past 2 years). But quotas have risen alongside them. Remember, a higher OTE but lower relative attainment still means worse efficiency!

💡Costly Mistake:

An important lesson I have learned is how costly it can be to hire reps for the wrong segment versus what you actually need).

A company thinks it needs an enterprise sales rep (so they pay the 25%+ premium for those reps) when in reality they are selling to mid-market. This means the OTE will be high, but either 1) quotas will be too low or 2) attainment will be too low. Both of which means efficiency is really bad. The reps might be good, but they aren’t what you need.

Ultimately what matters is the lifetime value created versus the customer acquisition cost. In theory this is the perfect metric to evaluate efficiency, but VERY hard to accurately model.

Lifetime value = (lifespan in years) * (annual gross profit per customer)

The point isn’t to be extremely accurate. It’s to understand the drivers and assumptions.

“What must be true for my deals to make economic sense?”

Deals aren’t closed by just the sales rep. They have a team behind them that make up the total acquisition costs (SDR, SE, CSM, marketing, etc). A GTM pod is all the headcount and spend that surrounds an individual Account Executive (AE).

Below is a model I built to measure the GTM Pod efficiency.

The size and various headcount ratios in the GTM Pod can be dependent on many factors as well. For example, AI-native companies tend to have lower headcount ratios.

While these ratios improve as a company scales, savings are at least partially offset by more layers of management, ops, higher compensation, etc.

Make sure the total acquisition cost makes sense relative to the expected lifetime value of the deal. You may be surprised at how bad some deals probably are…

Below are the key reports I make sure my CRO is reviewing to evaluate sales rep efficiency. Make sure they have the data!

We are finalizing 2026 planning right now.

You need to evaluate your sales rep (and broader GTM) efficiency now. Don’t just copy what you did last year or what the benchmarks say. Too much has changed for that to always be the right answer today.

Sales comp planning is critical to get right. Figure out now what sales reps are overpaid and which ones are just highly paid.

I will leave you with one more thought on sales reps hitting quota…

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