The average salary for a sales development representative is about $45,000 annually, but SDR salaries are only one part of building a sales development function.

How much do sales development representatives make?

The average salary for a sales development representative is about $45,000 annually, with 80% of sales development representatives falling between $35,000 and 65,000, depending on their location and experience (source). 

This compensation is normally performance-based, with a base salary providing the floor, plus commissions and bonuses. 

However, SDR salary is only one part of starting an SDR team. So, let’s break down the other costs. 

Other Costs of SDR Team

It’s easy to multiply the average sales development representative salary by the number of representatives you want to hire and come to a completely wrong figure for how much it will cost you to implement your own sales development function.  Don’t forget to add the time it takes you or recruiters to find, interview, or train them.

Not only are the salaries variable, but you also have to consider your fixed or infrastructure costs when developing a team. There are three main areas you need to consider.

1. SDR Sales Manager

With an average salary of $61,000 (source), your sales manager is the highest single cost outside team salaries and an absolute necessity for any in-house SDR team. 

A good SDR manager is more than just someone who hands out sales targets and coordinates scheduling. In addition, they handle recruitment and training and provide a necessary point of contact between the frontline SDRs and upper management (source).  

This is not a job you can hand to just anyone. You need a manager specialized in the field.

2. SDR Tools

Every job requires specialized tools, and the SDR is no exception to that rule (source). 

Setting up an in-house SDR team involves obtaining licenses for multiple software tools, most of which are available on a subscription basis. 

As of 2017, these tools cost an average of $66 per month per user in subscription fees, with most teams requiring six tools. This works out to an average per employee expenditure of approximately $4,000 per year regardless of organization size. 

These tools include:

  • Social prospecting
  • Data and list services 
  • Email engagement
  • Pipeline management
  • Customer Relationship Management
  • Phone lines

As you can see, the cost of this collection of tools can add up quite quickly.

3. SDR Office Space

Every employee needs somewhere to work, and you have to supply it. For sales development representatives, that normally works out to approximately 75 usable square feet for each person. 

With a monthly rental range of between $8-23 per square foot in the US, depending on location and about $15 per square foot, this works out to $1,125 per employee per month at a minimum (source). However, the locations dense with sales development talent tend to be the most expensive, such as Seattle or San Francisco. So, your cost to hire SDRs can balloon rapidly depending on your ability to hire SDRs in your local market. 

Other Costs When Starting an SDR Team

Just as the average sales development representative’s salary doesn’t represent the entire cost of building up an in-house SDR team, financial costs are not the only considerations you have to consider when deciding about how to handle your own SDR needs.

1. SDR Training Time

Every new organization takes time to dial in. No matter the quality of your SDRs, they will take some time to learn the product and systems to ramp up to find success. 

This is something you have to factor in when starting up your in-house team. 

Do you have the time available to bring them online?

2. SDR Team Turnover

One of the biggest issues with SDR teams is churn. The average SDR tenure is less than eighteen months (source). 

This rapid turnover can have significant negative effects on recruiting and stability, especially when considering that it takes more than fifteen months to master the role. 

That means many companies may only get two or three months of peak performance out of the average SDR.

To Outsource or Not to Outsource Your SDR Team?

After looking at the costs involved in bringing your SDR team up to speed, many organizations often look to outsourcing. 

Some business leaders lack the underlying knowledge base to set up their team and the time needed to learn the necessary skills. In a case like this, it can make a lot of sense to outsource your SDR team. It’s not just about the money; it’s also about the time. 

You only have so many hours in a day, and you have to use them efficiently. So the question then becomes, when does it make sense to outsource rather than building your SDR team in-house.

When SDR Outsourcing Makes Sense:

There are several situations where outsourcing does indeed make sense, just as there are those where it doesn’t. 

Outsourcing Considerations

The key is to understand your own situation well enough that you can make an informed decision.

Here are some of the main reasons organizations may choose to outsource.

  • It’s a lot faster to bring an outsourced team online than build up an in-house team. In many cases, you can get a turnkey solution.
  • When you want to set a firm-fixed budget for a given result, it’s a lot easier to set up a contract with an outsourcer than to try and manage costs as tightly with an internal team.
  • Contracting with an outsourcer is particularly effective when you lack the relevant internal skill set, whether recruiting, training, coaching, or even measuring results.

SDR Salaries Are Important, but Not Everything

Even though they are a huge part of the costs involved in setting up an internal SDR team, it’s essential to remember that they are only part of the equation. You have to consider all the factors, including the option of outsourcing, before making a decision.

Interested in learning more about SDR solutions, outsourcing, and exceeding your sales goals? Contact Sales Roads today.

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