Sales Development Representatives (SDRs) and Business Development Representatives (BDRs) are the backbone of any B2B sales organization. They generate pipeline, qualify leads, and create the opportunities that Account Executives close. Yet SDR compensation remains one of the most misunderstood areas of sales incentives.
This guide covers everything you need to know about SDR/BDR compensation: from base/variable splits and performance metrics to career progression, ramp periods, and how AI is changing the role. With the right incentives, you can reduce your annual SDR turnover from the industry average of 34-50% according to Bridge Group to a level that actually allows you to build a strong team.
Before diving into compensation, it's important to understand the roles. An SDR (Sales Development Representative) typically focuses on inbound leads and qualifying marketing-generated opportunities. A BDR (Business Development Representative) primarily works on outbound prospecting and cold outreach to new potential customers.
In practice, many companies use the terms interchangeably, but compensation models should reflect the different responsibilities and the control the employee has over their results.
The first and most important decision in an SDR compensation plan is the distribution between base salary and variable compensation. Here are the most common splits and when they work best:
| Split | Best For | Risk Level |
|---|---|---|
| 70/30 | Entry-level SDRs, new markets, product launches | Low |
| 65/35 | SDRs with 1-3 years of experience | Medium |
| 60/40 | Experienced SDRs with 3-5+ years in established markets | High |
According to Alexander Group, the 70/30 split is the optimal balance between security and motivation for SDRs.
| Metric | Typical Payout | Pros | Cons |
|---|---|---|---|
| Meetings Booked | $40-100 | Easy tracking, clear motivation | Risk of quantity over quality |
| Meetings Held | $55-125 | Better quality indicator | SDR has limited control over show rate |
| SQLs (Qualified Leads) | $350-700 | Focus on quality | Dependent on AE assessment |
| Pipeline Generated | 0.5-2% of value | Direct revenue alignment | Long feedback loop |
| Closed/Won | 1-3% of deal value | Strong end-result alignment | No control over AE closing ability |
According to OpenView Partners, a hybrid model is recommended where 40% of the bonus is tied to appointments and 60% to qualified opportunities.
| Experience Level | Base Salary | OTE | Split |
|---|---|---|---|
| Entry-level (0-1 year) | $45,000-55,000 | $65,000-75,000 | 70/30 |
| Mid-level (1-3 years) | $52,000-60,000 | $75,000-90,000 | 65/35 |
| Senior (3-5+ years) | $58,000-72,000 | $85,000-100,000 | 60/40 |
| Top Performers | $65,000-80,000 | $100,000+ | With accelerators |
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Book a demo →| Career Step | Typical Time | OTE Range |
|---|---|---|
| SDR to Senior SDR | 12-18 months | $70,000-100,000 |
| Senior SDR to SMB AE | 6-12 months | $110,000-150,000 |
| SMB AE to Mid-Market AE | 12-24 months | $130,000-190,000 |
| Mid-Market AE to Enterprise AE | 24-36 months | $190,000-300,000+ |
According to Bridge Group, the average time from SDR to Enterprise AE is 6.25 years across 6 different roles.
| Mistake | Problem | Solution |
|---|---|---|
| Overly Complex Plans | Loses motivating effect | Explain the plan in 5 minutes |
| Arbitrary Quotas | Frustration, only 63-68% hit quota | Base on historical data |
| Uncontrollable Factors | SDR cannot influence AE closing | Focus on metrics SDR controls |
| No Activity/Outcome Balance | Either busy without results or luck | Use 40/60 hybrid model |
| Quota Ratcheting | Increases turnover, destroys motivation | Use accelerators instead |
Over 80% of compensation plans use accelerators according to Alexander Group.
| Quota Attainment | Multiplier | Effective Commission |
|---|---|---|
| 0-70% | 0x | No payout |
| 70-100% | 1x | Standard rate |
| 100-120% | 1.5x | 50% extra per deal |
| 120-150% | 2x | Double rate |
| 150%+ | Cap | Prevents sandbagging |
| Metric | Benchmark | Source |
|---|---|---|
| Average Quota Attainment | 63-68% | Gartner |
| SDR-to-AE Ratio | 1:2.3 | Bridge Group |
| Quality Conversations per Day | 3.6 (down 55% since 2014) | Bridge Group |
| Meetings per Month (Outbound) | 15 | Bridge Group |
| Show Rate | 80% | Bridge Group |
| Inbound Response Time Boost | +400% conversion at <5 min | Harvard Business Review |
| Cost Category | Annual Cost |
|---|---|
| Fully Loaded Cost per SDR | $105,000-155,000 |
| Tech Tools per SDR | $5,700-6,800 |
| Productivity During Ramp | 50% (full salary) |
SDRs spend over two-thirds of their time on non-sales-related tasks according to Salesforce. AI can handle 80-90% of certain SDR tasks according to Gartner. Sales teams using automation save 18-22 hours per week per rep according to McKinsey.
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Book a demo →| Type | Pros | Cons |
|---|---|---|
| Individual | Direct link effort/reward, clear accountability | Competitive culture, information hoarding |
| Team-based | Camaraderie, sharing best practices | Free-rider problem, demotivating top performers |
| Hybrid (Recommended) | Best of both worlds | More complex to administer |
| Month | Quota Expectation | Commission |
|---|---|---|
| Month 1 | 0% | 100% guaranteed |
| Month 2 | 50-70% | 100% guaranteed |
| Month 3 | 100% | Standard plan with accelerators |
| Month 4+ | 100% | Normal compensation plan |
| Factor | Inbound SDR | Outbound SDR |
|---|---|---|
| Primary Focus | Qualifying MQLs | Prospecting cold leads |
| Compensation Level | Generally lower | Generally higher |
| Reports To | Marketing (60%) | Sales (90%) |
| Lead Value | 2x higher (easier to close) | Lower conversion, self-generated |
| Step | Action | Recommendation |
|---|---|---|
| 1. Base/Variable Split | Choose distribution | 70/30 for new, 65/35 for experienced |
| 2. Performance Metrics | Choose metrics | 40% appointments, 60% SQLs |
| 3. Quotas | Set realistic goals | Base on historical data |
| 4. Accelerators | Design overperformance rewards | 1.5x at 100%+, cap at 150% |
| 5. Ramp Period | Plan onboarding | 3 months with graduated quotas |
| 6. Team Components | Add shared incentives | Team SPIFFs for collaboration |
| 7. Communication | Document and explain | Review quarterly |
Manual commission calculation in Excel creates errors and distrust. Modern commission platforms automate calculations, provide real-time visibility, and reduce administrative burdens.
Book a demo with Prowi and experience how automated commission calculation can help you design, implement, and manage SDR compensation plans that attract and retain talent.
Bridge Group: SDR Metrics and Compensation Research 2024. Alexander Group: Global Sales Compensation Pay Mix Guidelines. Gartner: Sales Quota Attainment and AI in Sales Research. Harvard Business Review: Lead Response Time Studies. OpenView Partners: SDR Compensation Best Practices. McKinsey: Sales Automation Productivity Research. Salesforce: State of Sales Report. Pavilion: Sales Compensation Benchmarks. Glassdoor: US Sales Role Compensation Data.