How To Calculate Time-to-Hire and Ramp Up Costs

The cost associated with unfilled sales headcount can compound each week/month for every unfilled position. Costing your business thousands to hundreds of thousands of dollars in revenue. We worked with the leading recruitment firm for revenue-generating, marketing, and people operation roles, Betts Recruiting, to provide B2B businesses with a guide to hiring and ramping faster: Faster Hiring Means More Sales.

Within this sales hiring guide, we developed two formulas that you can manipulate to see what your business is losing in revenue based on the specific revenue goals of each rep. 

How to Calculate the Cost of Unfilled Sales Headcount

Each day an AE position with a $1 million annual quota goes unfilled can cost your business $4,150/day. When you put it like that, you can understand the stringent hiring deadlines for revenue generating roles. But let’s break down how we got this number and how you can use our formula to forecast the cost of unfilled sales headcount within your own organization.

Download Unfilled Headcount Formula (Tab 1)

Steps to calculating the cost of unfilled sales headcounts

A. Estimate the number of weeks it will take to fill your open sales headcount

B. Determine how many reps you need to hire

C. Determine expected annual contribution of the role

D. Multiply B x C

E. Multiply A x D 

F. Divide E / 52 (weeks in a year)

And voila! You have your Year 1 Impact of Missing Headcount Or, you could just plug your numbers into our formula.

Simply make a copy of the sheet and add it to your drive or download it as an Excel file. Once you have access to change the fields. Test out the cost difference by adding and subtracting the number of reps you need to hire and adding and subtracting the number of weeks it will take to hire them. 

The Cost of Delayed Ramp

The cost of delayed ramp is a little bit trickier to calculate, but we know that a new Sales rep doesn’t start generating revenue Day 1 on the job and they have a different expected quota during their ramp time, therefore the negative cost effect of hiring a new sales rep doesn’t end as soon as you hire them.

Download Cost of Delayed Ramp Formula (Tab 2)

Steps to calculating the cost of delayed ramp

A. Determine expected annual contribution of the role 

B. Determine actual dollars expected during ramp

C. Determine monthly quota after ramp

D. Determine estimated ramp time (based on company historical data) 

E. Subtract 12 (months) – D

F. Multiply E x C 

G. Add F + B 

H. Subtract G – A 

This formula will give you your 1 Year Gain/Loss Per Rep… Or, to make this process extremely easy, plug your numbers into our formula in tab 2 of the Google Sheet.

If you don’t like the numbers you’re getting on an expected ramp-up time of 4+ months, check out our quick tips on how to ramp faster that includes a 6-week onboarding calendar to improve productivity and decrease ramp up.

Reduce the Cost of Unfilled Headcounts and Slow Ramp | Contact Skaled

Skaled is a pioneering sales consultancy dedicated to helping businesses and their sales organizations put the right people, processes, and technology in place. By implementing processes for faster hiring and reduced ramp time we help sales organizations reach their potential faster and companies meet their revenue goals.