What goes in
- base salaries for reps and the manager
- commission and bonuses
- phone system, CRM, other services
- the cost of hiring and of replacing people
- the owner's time, if they are still in the day-to-day
The formula
Cost of sales equals total expenses for the period divided by the revenue the team brought in over the same period. Revenue means the money that has actually reached the bank.
13% → 6%our measurement: outsourced against in-house after the build
$30,000first-month revenue of an in-house team of two reps
What to compare it with
- An outsourced quote for your volume. That is the most honest benchmark.
- Your own number six months ago. The trend matters more than the absolute figure.
- Your product margin. Cost of sales above margin means you sell at a loss.
At larger volumes outsourcing is expensive, and there is a second problem: it always wants the warmest customers, because that is what pays it. Cold enquiries then get handled by nobody, and the project loses money twice.
What it breaks down into
- cost per enquiry handled
- cost per closed deal
- the share of fixed costs inside it: the higher that share, the worse a downturn hurts