Breakeven Sales Calculator assists management in evaluating the merit of hiring additional salespeople. It determines the amount of incremental sales a new salesperson must generate for the company to breakeven on its hiring investment. It also tells you when that breakeven point will occur based on the sales and profit generated.
In almost every company, the effort of the company's sales resources is a key success factor in the company's overall marketing mix. A larger sales force can reach more customers, spend more time with key accounts, and promote more products than a smaller sales force. (1)
Although salespeople are highly productive they are also expensive. Determining whether to add a new salesperson presents a predicament. Adding an additional salesperson may increase sales. But, it will definitely increases costs.
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The hire decision should be easy
if incremental sales are substantial relative
to costs - creating meaningful profit and cash
flow.
•
Depending on management's risk tolerance, the
notion of bringing additional sales resources
on board should be re-evaluated if projected
sales: 1) come close to breakeven sales or 2)
fall meaningfully below breakeven.
•
In both cases, management might be better served
by maintaining the current sales force size and
seeking out ways to: 1) elevate the productivity
of current sales force members (e.g., reducing/eliminating
non-critical tasks, better matching sales resources
to current and prospective customer segments);
2) covering some accounts with less expensive
sales channels; and/or 3) enhancing other marketing
mix variables that also drive sales.
(1) Andris A. Zoltners, Prabhakant Sinha and Sally E. Lorimer, Sales Force Design from Strategic Advantage (New York, New York, Palgrave Macmillan 2004), page 221.