SDR Salary: How Much Does it Cost to Start an SDR Team? [Breakdown]

Sales Development Representatives (SDRs) are persuasive, skilled sales professionals that significantly accelerate the lead conversion process. SDRs accelerate sales by qualifying leads and conducting outreach to engage leads through emails and phone calls. 

Given their importance for an organization’s sales process, how much is the salary for an entry-level SDR, and what are the associated costs for hiring one? 

Sales Development Representative Salary

According to Payscale, the average salary of an entry-level SDR in the US is $45,676.  They may also be eligible for other compensation such as:

Commissions

A commission is a reward that sales employees receive based on sales they bring into the company. 

In some organizations, SDRs receive a commission for every successfully scheduled appointment. In others, they receive a commission if the appointment they schedule is converted into a closed deal or if they exceed their quota for a certain period. 

SDR earns between $5,000 and $26,000 in commission yearly, but those who exceed their quotas every period can earn more.  

Bonus

Bonus is often confused with commission, but they are different. Commissions are recurring financial compensations given to employees who reach their quota or close revenue. Bonuses are a one-time, non-renewable payout that can be variable or fixed depending on the terms of the bonus. Whether an SDR or the sales team will receive a bonus depends on the structure of their agreement and is sometimes left to management decisions. 

Although SDRs are salespeople, they are not the ones closing deals, so some companies offer them bonuses instead of commission, whereas some offer both. They usually get around $3,000 to $25,000 worth of bonuses annually. 

Profit-Sharing

Profit-sharing refers to an incentivized compensation program, rewarding employees with a part of the company’s profit. The formula for profit-sharing is usually defined beforehand in the SDR’s employment contract. 

On average, SDRs’ profit-sharing range is between $507 and $20,000. The more profit a company has, the higher the potential share will be. 

Considering these compensations, the average total pay of an entry-level SDR is between $39,000 – $77,000.

Other Compensation Variables

Several factors affect the compensation package of an SDR. Some common traits that impact SDR compensation include:

Education

A bachelor’s degree does not guarantee a higher salary for SDRs, but it does help give an advantage, especially if it’s a hiring qualification that a company is looking for. It can also be used as leverage during the negotiation phase of the employment contract.

Most companies prefer their SDRs to have bachelor’s degrees related to:

• Business
• Management
• Marketing
• Administration

It’s possible to be an SDR with only a high school diploma, but they need to have relevant experience in sales or related certification to be competitive with other candidates. 

Years of Experience

SDRs with experience in the same position are usually paid better. The more years of experience, the higher salary they could negotiate for, as they are familiar with the tasks involved in the job. They also take less time to start, since the company does not have to teach them the basics.

Those with related experience can also leverage for higher pay. Some relevant experiences for an SDR role include: 

• Customer Service Experience

The responsibility of an SDR is not limited to helping increase sales. They are also responsible for representing the brand and helping boost brand awareness and reputation. A background in customer service, if possible in a call center environment or retail, will be helpful in achieving this. 

• Sales Experience

SDRs are the first point of contact for qualified leads, so one should have a good understanding of the best sales practices. At the same time, they must have expert knowledge about the products and services they represent. 

Skillset

The number of relevant skills an SDR candidate has is a big factor when deciding the total compensation. These are some of the most sought-after skills for an SDR:

• Language and Communication Skills

Since a huge part of the role of SDR is communicating with qualified leads, they need to have intermediate to advanced language and communication skills. 

Their speaking ability must also have a sense of persuasion, but not to the point where they sound too pushy. That will negatively affect the brand’s image. At the same time, they must be able to effectively convey the features of the products and services that they are representing and answer whatever questions a lead may have. 

• Data Analytics Skills

SDRs have a lot of data in their hands, but the information will be for nothing if they don’t know how to leverage the data properly. That is why they need to have data analytics skills:  to parse the best information to use at a specific time. 

• Data Entry Skills

SDR candidates must have exceptional data entry skills. Typing accurately and quickly should be second nature, mainly because they have to input vital information when doing lead qualification or outreach calls. They must also be able to distill the most important information to pass to their AE.

Certification

SDR candidates with certification related to sales and customer relation management (CRM) can negotiate for a higher salary. Organizations usually consider this because the certification that they hold means that they already have the necessary foundations for a good SDR.

Other Costs Associated With Hiring SDRs

Paying for an SDR’s salary and benefits is not the only cost you have when hiring one. Other expenses include:

Recruitment Costs

According to Glassdoor, the average cost of hiring a new employee is around $4,129. You can consider this figure a baseline cost for hiring an SDR or calculate your cost-per-hire to get a more accurate number. 

The formula for calculating cost-per-hire is:

Total External Cost + Total Internal Cost / Total Number of Hires for a Period

Training Costs

According to a survey, the average cost of training an employee for a company with 100 to 999 employees is $1,678 for every employee. Companies with less than 100 employees are more likely to spend more on training costs, especially for a position such as SDRs. 

SDRs are specialized personnel who must have expert knowledge about the products and services they represent. It takes time for them to achieve this through training. The longer the training period is, the higher the training cost will be. 

SDRs must also be trained to embody the organization’s core values and brand messaging. They’ll also require training about the company policies, tools, and equipment, and other training that managers deem necessary before they are ready to start doing their tasks. 

Tools and Equipment

The most basic equipment that the SDRs need is a computer. Aside from that, they also need the following tools: 

• CRM Software

The most common CRM software is cloud-hosted and has monthly fees ranging between $50 and $135 per user. The price can increase depending on the number of users and features required by your operation. 

• Phone Systems

A lower-end VoIP phone system can cost between $100 and $500 for every extension. On top of that, you will pay for maintenance and service fees that can be between $10 and $25 monthly per extension. 

This does not include the cost of the desk phones or headsets. Lower-end models start at $50, while advanced models cost around $500 per piece. 

• Cold calling software

A VoIP line allows your SDR team to make calls, but they will also need a platform for tracking prospect outreach. Some CRM systems can facilitate this tracking, but most SDR teams use specialized cold-calling software to accelerate results.

• Mail Delivery Software

The average cost of a mail delivery software is around $182.35. But the cost can be higher depending on the number of mails you are looking to work on for the month and other add-on features. 

• Contacts Database

The average cost of raw B2B lead data is between $0.30 – $1.00 per record. Higher-quality data costs more, with pre-researched leads costing as much as $200 each.

• Email Validation

Email validation providers bill according to the number of emails you verify. The fees start at $190 and can go up to $1,100 for 500,000 email verifications. However, whether it’s worth it or not will depend on accuracy, which is typically lower for providers with more affordable prices. 

Turnover Costs

SDRs face rejection daily; it’s understandable why not many stay in this role for a long period. In fact, the average tenure of an SDR is only 1.8 years, and the turnover rate is 34%. 

In some cases, SDRs quit their jobs not because of the stress and pressure, but because they get a promotion. This is a consequence that being an SDR is an excellent training and stepping stone for those looking for a promotion to AE. The problem is that many companies promote their SDRs too early, thinking that it’s the most cost-effective thing to do. 

Nevertheless, the turnover cost of an SDR is from 150% to 200% of his or her annual salary. It’s easy for your costs to balloon if your SDR turnover rate exceeds 20%.  

Hiring SDRs: The Bottom Line

Hiring an SDR can unburden your sales team, but it can also be quite expensive. You have to pay for salary, benefits, commissions, and bonus. And the costs do not end there because there are also expenses such as recruitment and turnover, training, tools, and equipment. 

An in-house appointment setting program is not workable for some companies, such as smaller businesses. But, the good news is that they still benefit from appointment setting efforts by outsourcing SDRs from a reputable appointment setting service provider such as SalesRoads. Contact us today to avail of our custom appointment setting services at a reasonable price.