Short answer: The most common rule of thumb says a salesperson should bring in 3 to 5 times their pay. But a ratio that ignores gross margin tells you very little. In our worked example, a rep with total target pay (OTE) of DKK 600,000 costs the company DKK 758,200 a year. At a 40% gross margin, the rep needs DKK 1,895,500 in revenue, or 3.2 times OTE, just to cover their own cost, and 6.3 times OTE to contribute the same amount again to the rest of the business.
This guide covers the usual rules of thumb and why they often miss. It then shows how to work out the right ratio for your own company: from the fully loaded cost of a rep, through gross margin, to payback time. Every assumption is written out, so you can swap in your own numbers. The example uses Danish costs and Danish kroner, but the method works in any Nordic country.
The rules of thumb: 3, 4 or 5 times pay
Ask around and you will usually hear one of these. They are rules of thumb, not data:
- 3 times salary in revenue. The most common one. Easy to remember, but it says nothing about what is left of the revenue once the cost of goods is paid.
- 3 to 4 times salary in gross profit. Better, because it measures what the company actually keeps. But it does not say what "salary" includes.
- A quota of 4 to 5 times OTE. Standard in US software. SaaStr writes that a quota-to-OTE ratio of 4-5x remains the standard for account executives, and higher in enterprise (SaaStr, 2023). Software usually has high gross margins, so the ratio does not carry over to a wholesaler or a construction supplier.
All three share the same problem. They mix up three different questions: what does the rep cost in total, how much of revenue is gross profit, and how much should the rep contribute beyond their own cost? The answers depend on your business, which is why the right ratio can be 2 for one company and 10 for another.
Step 1: The fully loaded cost of a sales rep
Salary is only part of the cost. Pension, holiday pay, statutory contributions, a car, phone, laptop, software and travel all belong in the total. The table shows our example for a rep employed in Denmark. All figures are assumptions, not market data:
| Item | Assumption | Per year |
|---|---|---|
| Base salary | DKK 40,000 a month | DKK 480,000 |
| Commission at 100% of target | Pay mix 80/20 | DKK 120,000 |
| Employer pension contribution | 8% of base (depends on contract and collective agreement) | DKK 38,400 |
| Holiday supplement | 1% of base | DKK 4,800 |
| Compensation for commission lost during holiday | 12.5% of commission | DKK 15,000 |
| ATP, AUB, Barsel.dk and insurance | Combined estimate | DKK 10,000 |
| Car, phone and laptop | DKK 5,000 a month | DKK 60,000 |
| Software and travel | DKK 2,500 a month | DKK 30,000 |
| Fully loaded cost | DKK 758,200 |
The rep's OTE is DKK 600,000. The fully loaded cost is 1.26 times OTE and 1.58 times base salary. The holiday items follow the Danish Holiday Act (ferieloven): salaried staff on paid holiday get a 1% holiday supplement and compensation for commission lost while on holiday, and 12.5% of commission is the method Danish courts have accepted. If your reps are in Sweden, Norway or Finland, replace these lines with the local rules. Recruitment, management time and office space are not included. Add them if you want the full picture.
What is a realistic salary? Statistics Denmark put the average pay for B2B sales representatives at DKK 58,892 a month in 2025, including pension and bonus. See every role in our sales salary guide for Denmark.
Step 2: Use gross profit, not revenue
The rep's cost is paid out of gross profit: revenue minus the variable cost of goods, subcontractors and freight. Gross margin is gross profit as a percentage of revenue. The revenue that covers the rep is therefore:
Break-even revenue = fully loaded cost ÷ gross margin
Covering their own cost is not enough, though. The rep should also contribute to overheads and profit. How much is your decision. In the example below we chose that the rep should generate twice as much gross profit as they cost:
Target revenue = 2 × fully loaded cost ÷ gross margin
| Gross margin | Break-even revenue | Times OTE | Target revenue (gross profit = 2 × cost) | Times OTE |
|---|---|---|---|---|
| 25% | DKK 3,032,800 | 5.1 | DKK 6,065,600 | 10.1 |
| 40% | DKK 1,895,500 | 3.2 | DKK 3,791,000 | 6.3 |
| 60% | DKK 1,263,667 | 2.1 | DKK 2,527,333 | 4.2 |
| 80% | DKK 947,750 | 1.6 | DKK 1,895,500 | 3.2 |
The table shows why the rule of thumb misses. A rep who sells 3 times their pay, DKK 1,800,000, needs a gross margin of at least 42.1% to cover their cost. At 40% that is DKK 720,000 in gross profit, and the rep is a small loss-making business. At a software company with an 80% margin, on the other hand, 3 times pay covers the rep almost twice over.
Measured in gross profit, the ratio no longer depends on the industry. In the example, the rep must generate 1.26 times their pay in gross profit to cover themselves and 2.53 times to cover themselves twice. The rule of "4 times pay in gross profit" means covering the cost 3.17 times here. That is ambitious, but not unrealistic for an experienced rep with healthy margins.
Step 3: Payback on a new sales hire
A new rep does not sell at full speed from day one. The ramp-up costs money, which is why payback is the number founders and boards ask about most. The assumptions:
- Fully productive revenue: DKK 300,000 a month (DKK 3,600,000 a year, 6 times OTE).
- Gross margin: 40%, so a fully productive month gives DKK 120,000 in gross profit.
- A sales cycle of about 2 months, so no sales in months 1 and 2. Then 25%, 50% and 75% of full productivity in months 3, 4 and 5, and full productivity from month 6.
- Cost is 758,200 ÷ 12 = DKK 63,183 a month from day one, which assumes commission is guaranteed at target level during the ramp.
| Month | Revenue | Gross profit | Cumulative result |
|---|---|---|---|
| 1 | DKK 0 | DKK 0 | DKK -63,183 |
| 2 | DKK 0 | DKK 0 | DKK -126,367 |
| 3 | DKK 75,000 | DKK 30,000 | DKK -159,550 |
| 4 | DKK 150,000 | DKK 60,000 | DKK -162,733 |
| 5 | DKK 225,000 | DKK 90,000 | DKK -135,917 |
| 6 | DKK 300,000 | DKK 120,000 | DKK -79,100 |
| 7 | DKK 300,000 | DKK 120,000 | DKK -22,283 |
| 8 | DKK 300,000 | DKK 120,000 | DKK 34,533 |
| 12 | DKK 300,000 | DKK 120,000 | DKK 261,800 |
The investment peaks in month 4 at DKK 162,733, and the rep has paid back their cost during month 8. Year one gives DKK 1,020,000 in gross profit, DKK 261,800 more than the rep costs. Year two, at full productivity all year, gives DKK 1,440,000 in gross profit, 1.9 times the cost.
Note how sensitive payback is to the ramp. If the first sale comes two months later, payback moves from month 8 to month 12, because the rep also has to earn back the cost of the two extra months. That is why the ramp belongs in both the budget and the pay plan. We cover ramped quotas and guaranteed commission in our guide to ramp plans for new sales reps.
How to use the ratio
- Work out your own fully loaded cost. Start from the table in step 1 and replace the assumptions with your own.
- Use your actual gross margin. If products carry different margins, use the margin on what the rep actually sells.
- Decide how many times the rep should cover their cost. This is a strategic choice. A company in growth mode may accept 1.5 times, while one focused on profit will ask for more.
- Turn the ratio into a quota. Target revenue is the starting point for quota. Spread it across months in the sales budget template, and set pay and the commission rate in the OTE and pay mix template.
- Check the team as a whole. Compare the size of your sales team with other B2B companies in our data on salespeople per employee.
The rep's pay is also a large part of your customer acquisition cost. To see what a new customer costs in total, read about CAC in the glossary. If you are about to make your first sales hire, read our guide to hiring your first salesperson.
Common mistakes
- Applying the revenue rule of thumb in a low-margin business. At a 25% margin, the rep must sell 5.1 times OTE just to break even.
- Counting only base salary. In the example, the fully loaded cost is 58% higher than base salary.
- Forgetting the ramp. A quota that assumes full productivity from month 1 gives a budget that will not hold.
- Paying commission on revenue while setting targets in gross profit. The rep can then hit commission through discounts that destroy the margin. Consider commission on gross profit if margins vary a lot.
Prowi and sales compensation
Prowi calculates commission live from your CRM and finance data, and reps follow their earnings in the app. When the period closes, the statement is approved and passed on to payroll. To test the numbers first, use the OTE ratio calculator and the other free tools in our calculators. To check the commission plan itself, take our commission plan health check. Book a demo if you want to see your own plan set up.
Frequently asked questions
How much revenue should a salesperson bring in?
There is no fixed number. Rules of thumb say 3 to 5 times pay, but the right ratio depends on the fully loaded cost of the rep and your gross margin. In our example, a rep with DKK 600,000 in OTE must sell 3.2 times OTE at a 40% margin to cover their own cost.
What is the fully loaded cost of a sales rep?
Base salary plus commission, pension, holiday pay, statutory contributions and equipment such as a car, phone and laptop. In our Danish example, the fully loaded cost is DKK 758,200 a year for a rep with a base salary of DKK 480,000.
Should the ratio be based on revenue or gross profit?
Gross profit. Gross profit is what pays the rep's salary. A revenue ratio only makes sense if you know your gross margin and include it.
How long does it take for a new rep to pay back?
It depends on the sales cycle and the ramp. In our example, with two months without sales and full productivity from month 6, the rep pays back in month 8.
What is a good quota-to-OTE ratio?
Quota divided by OTE. In US software, 4-5 times is a widely used rule of thumb for account executives. For a Nordic company, work the quota out from your own gross margin and cost, as shown in step 2.
Sources
- Statistics Denmark, StatBank table LONS20, earnings by occupation, 2025
- Danish Holiday Act (ferieloven), LBK no. 152 of 20/02/2024 (retsinformation.dk), sections 16-19
- SaaStr: Sales reps really do have to close 4x-5x what they take home (2023)
The worked examples are illustrative and based on the assumptions stated in the text. Check pension and contribution rates with your accountant or payroll provider.