Jesse Pujji breaks down the math on landing $10K monthly clients: expect 50-60% gross margins, spend 10-15% of revenue on sales and marketing, and aim for 25-30% EBITDA. He also weighs in on whether a 5% commission plus 5% perpetual royalty makes sense.
So I'm curious from your experience, how much are you allocating to sales, travel? You do a $10,000 a month deal. How much of that is allocated towards sales? What's your CAC as a percentage of your revenue?
I would think of something like 50, 60% gross margins, maybe higher depending on if you have automation or bigger clients, 10 to 15% of your revenue is sales and marketing. You're able to generate a 25 to 30% EBITDA margin.
I was negotiating with my sales guys, 5% commission only, 5% in perpetuity. What are your thoughts on that?
I would Percentage commissions are real challenging. Say you have 2 salespeople and you give them 5% each. Those 2 people now feel like 3 people are eating their, like taking their money. Typically the way that I've done this is with a quota system. Say you're a salesperson, your on-target earnings is $200,000. So it's $100,000 base and then $100,000 when you hit your bonus plan. And they can have upside too. If they close $3 million, they make more from it.
