rruggzz

Strategic Partnerships

First Sales Hire @ Seed Round Startup <> Is My Commission Fair?

Hey All!!

Need some insight from big dogs that have been there, please assist;

I'm at a Healthcare tech start-up in its seed round, and am the first sales hire. Taking the responsibility off the cofounders plate. I was able to negotiate a good base because i'm building out everything from scratch, but the comp structure has been challenging to nail down for a few reasons.

They had a few studies they participated in, and only 2 real contract deals. So not much to base it off of. And the founders are both new to how commission works. I want to make sure i'm asking enough... but not being to greedy... but also getting paid my fair share.

For context, these are mainly larger deals with health plans & healthcare systems. 75K - 160K has been the standard. Either lump sum or paid as a Per Active Member per month basis.

I've asked $305 per demo/ meeting, and 20% on anything that closes.

Would you all say that's a good/ fair ask?

💰 Compensation

5

26 comments

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wolfblitzer

Member

8

CRO

I'm a CRO at a startup - seed round. If you asked for this from me - I'd not even bother calling you back.

My questions for you - do you believe in the product? do you believe in the founders? do you believe you have what it takes to build a business?

If yes, quit your squabbling on cash out of the business, and start focusing on long term equity. A startup is an opportunity for wealth building - not making quick money. If you are in it for the cash - go be an AE at something much more established.

From a founders perspective, they are all about managing cashflow and growth. If you ask for big numbers, you put a target on your back if you're not performing & not performing might not be your fault. Product may not be finished, pricing might be wrong, marketing might suck, there are literally thousands of things that can go wrong.

When I was in your shoes - i pushed hard for as much equity as the company could stand giving up & put myself on a plan to earn 10x that based on performance. I took very little cash out of the business, and only asked for more once i had proved i could do it.

poweredbycaffeine

WR Lieutenant

3

☕️

This is one of the only opinions that matters in this thread. Someone who has been there. Great way to put this all into perspective.

When I was the first sales hire, and 5th overall, at a pre-seed company I took a marginal bump in base to smooth out the bumps knowing that I’d be up and down on variable for 18 months as we figured our suit out. I took a flat $ amount on deals closed and a retention bonus of the same amount if the account stayed for 90 days. This encouraged us to find good ICP fits and didn’t draw heavy on cash flow.

Eventually we took a seed and built a real comp plan when I hired my first reps. However, my equity was second only to our CEO. Company fucked itself in the long term due to slow product and engineering teams, but that’s a story for another day.

rruggzz

Member

2

Strategic Partnerships

Thanks for that. Really needed insight from someone who been there. Yes to your 3 questions, and appreciate you laying out some risks.

ZEnabler

Good Citizen

1

CEO of Sales

Amen @wolfblitzer

CuriousFox

WR Officer

5

🦊

So many questions. Seriously keep us posted on your journey. No way in hell I'd have the guts to join at this stage.

rruggzz

Member

2

Strategic Partnerships

🤠 🙏

Pachacuti

Politicker

3

They call me Daddy, Sales Daddy

Cost to make.
Cost to sell.
Somewhere in there is a profit margin and you need to figure out how much of that you can get.

rruggzz

Member

1

Strategic Partnerships

But if my commission was based off of deal size, instead of the margin. Wouldn't that be a bigger piece of the pie?

Pachacuti

Politicker

0

They call me Daddy, Sales Daddy

Potentially. I’d have to see the math

braintank

Politicker

2

Enterprise Account Executive

Hard to tell without knowing what you sell and COGS.

Comission on SaaS vs medical devices are very different.

braintank

Politicker

1

Enterprise Account Executive

Also hard to tell when they only have 2 deals.

braintank

Politicker

3

Enterprise Account Executive

Also pre-seed is the only thing worse than series A

rruggzz

Member

0

Strategic Partnerships

Yeah typically the deals/ studies have been $250 - 1350 per participant. Then either paid upfront or as a Per member per month basis for give or take 100 participants.

rruggzz

Member

0

Strategic Partnerships

LOL has its ups and downs for sure

rruggzz

Member

0

Strategic Partnerships

Its an app and remote monitoring device. Device is $60 a unit, so 100 participants would be 6K. Everything else is software.

braintank

Politicker

1

Enterprise Account Executive

Thats the retail cost. How much does it cost to make?

rruggzz

Member

0

Strategic Partnerships

Are you asking to make the device? Or too have created, and continue developing the platform?

braintank

Politicker

1

Enterprise Account Executive

If you're selling the device for $60 there should be profit built in. Same with the software. Your cut will come out of that profit. Your CEO or CFO should have this number. If they don't -- run.

So without knowing your costs it's hard to tell what an appropriate commission should be.

In my business (enterprise cybersecurity SaaS) the norm is 10% commission. I'm sure there's medical device salespeople here who can comment on what the average is in that industry.

Now, as for the demos -- who are you demoing to? Are you recruiting people off the street to participate in a medical device trial? Are you trying to get meetings with healthcare systems so they can use your device with their patients?

Back of the napkin math, if I pay you $300 to book a meeting with someone who buys a $60 device, I'm going to be out of money soon.

rruggzz

Member

0

Strategic Partnerships

$60 is the cost to create the device. Consumer is buying our program that includes the device & app platform/ software. Program runs between 250 - 1350 per participant, based on needs. Long story short, its a solution to a chronic disease that is high touch, low cost & delivered remotely.

This is an enterprise sale, so yes health plans, healthcare systems. Im running full cycle from hunting gathering to close. Example of good prospect would be a Medical director, population health exec.

Regardless, sounds like I need to dig deeper on margins.

SADNESSLieutenant

Politicker

0

Officer of ♥️

60$ is the cost of the device AND ur selling it for 60$?

rruggzz

Member

0

Strategic Partnerships

Cost to create device is $60, yes. I'm then selling the "program" which includes the device and App/ software. The program ranges from $300 - $1350 per participant (including the Device and access to program).

So cost to create it $60 per unit... then selling for $300 - 1350 depending on demographic & intensity or program.

SADNESSLieutenant

Politicker

0

Officer of ♥️

i see so the device is never sold seperately it always comes with the program so on avg the proft is 240-1290?

SADNESSLieutenant

Politicker

2

Officer of ♥️

I'd be more concerned with how many users you are asked to sign up to hit 160k than the amount per demo. and 20% on anything that closes seems a little high

rruggzz

Member

1

Strategic Partnerships

Its tough because the number of users ranges, depending on the population size. Then the cost per user ranges, based on need.

One deal with an "average population" can be for 100 users @ $500 per. Another deal with a "high risk population" user can be for 100 users @ $1300 per.

So sounds like I got a good number with 20% on closing, at least 🤷‍♂️

DungeonsNDemos

Big Shot

0

Rolling 20's all day

You guys have only 2 contracts, and you're asking for $305 (specifically) AND 20%???

is that correct?

rruggzz

Member

0

Strategic Partnerships

Yeah 20%. High risk high reward.

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