2025 Software Sales Compensation Report from Hammer Consulting

Compensating salespeople can often be a difficult and mysterious task for many companies, especially in the software industry. Many companies make mistakes in methods they use to determine what they’ll pay. One of the most common is not matching the skills and experience level of the salesperson to what the current market rate is for those skills and experiences. Oftentimes, a company will determine their demands (in many cases this is their JD) for their perfect candidate.They will then base the compensation on what they think that person should be paid based on their own market perceptions, or based on what they can afford.

This would be analogous to you telling a realtor that you’d like to buy a 4,000 square foot house in the Bay Area for $500,000. Any qualified realtor will tell you that it does not exist in that particular part of the country. You either have to pay a lot more, or lower your standards and look in a different part of the country. If by chance you find a home for that price in the area, you’ll end up spending twice that in repairs.

When hiring a salesperson, a company should determine what their budget allows. Then they should do the appropriate research (or hire a professional recruiter) to determine what level of salesperson they can hire (and retain) for that level of compensation. You may be able to find that senior level AE or Sales Leader that is willing to accept your below the market comp plan. But you’ll either be hiring a “fixer upper” underperformer or you’ll lose that candidate to a more competitive offer once the market improves.

The Hammer rule in compensating salespeople: THE MARKET DICTATES COMPENSATION PACKAGES. It doesn't matter what you think that position should be worth.

We’ve put together some data on what the Software Sales Industry compensation looks like going into 2025. These figures are presented as base and on target earnings (OTE). Also, keep in mind that they will fluctuate depending on what compensation zone your candidate lives in. NYC, Bay Area, are typically Zone 1. Areas like Kansas City and Columbus are Zone 3. Equity will also impact the comp levels on most sales leadership roles.

Lead Generation/BDR/SDR’s

Always an extremely competitive market for this position as many larger software companies have created huge inside BDR teams. BDR’s typically don’t close deals, they set appointments/meetings for more senior AE’s. These are vital roles within companies, but many companies do a very poor job in retaining them.

Hammer hiring tip: Make sure you have a career advancement plan in place when hiring a BDR. The only reason you become a BDR is to get experience to move into a selling role.

Inside Sales Account Executives

Also a very competitive market, as many companies want to hire younger rising stars. The pool of candidates also tends to be fairly small because more than 60% of BDR’s hired never make it to the next level. These AE’s have their own territory and handle the deal from start to close. It’s typically difficult for them to make the leap to the Mid-Level role because their territory is not where they live. When companies hire senior AE’s they want them to have knowledge of or relationships with companies in their backyard.

Hammer hiring tip: Have a solid training program in place and make sure the manager is an excellent coach and mentor.

Mid-Level AE

This role did not exist years ago, but now we’re seeing large groups of them. They often refer to themselves as “enterprise AE’s” by title, but most are not. If you’re selling to mid-market accounts (under 500 million in revenue), you are not an Enterprise AE. The growth of this group was primarily due to the continual shrinking of the Senior Enterprise AE talent pool.

Hammer hiring tip: Pay market competitive compensation. If you’re not, somebody else will.

Senior Sales Engineers or Solutions Engineers

Their compensation has risen faster than any other group in the past 5 years. The reason is because of supply and demand. An increasing demand for highly technical business-facing candidates that can help AE’s drive deals in very complex and competitive enterprise environments. And, just like Senior Enterprise AEs, this candidate pool is getting smaller every year.

Hammer hiring tip: Have disruptive tech to attract these candidates and make sure they have a realistic AE to SE ratio (no more than 3 to 1, preferably no more than 2 -1).

Senior Enterprise Account Executives

The highly coveted Senior Enterprise Account executive aka, Rock Star, A level, etc. An AE every software company wants, but many are ill equipped to hire and retain them. Just like great developers and engineers, these people will make or break your company. It’s simple math; 1.2 million quota = $100,000 per month in revenue. Each month that territory is open your company is losing around $30,000 in gross profit. Equally as bad, a poor AE will produce 500k on that 1.2m quota vs an A player producing 1.8m - that’s 1.3 million dollar difference, and that’s just one AE!

Hammer hiring tip: Have an efficient hiring process - no more than 4 steps, and in 3 weeks or less. Most importantly, sell the candidate on the 1st interview because other companies will be.

DSM - 1st line manager

This is often one of the hardest jobs in software. They typically make much less than their top producers but work a lot more hours. They’re in the battlefield assisting their AE’s and receiving fire from all angles (their AE’s, 2nd line managers, VP’s and customers). Many are also tasked to hire through very junior internal recruiters or recruit on their own. Most take this job (just like the BDR) to get to the next level.

Hammer hiring tip: Look for candidates that want to help their AE’s get better and will get them to levels they thought were not possible.

AVP - 2nd line manager

More of a strategic role than 1st line, but still taking a lot of fire - but from different levels. This role has shrunk dramatically in the past 2 years as companies look to cut costs, placing more burden on the VP of sales.

Hammer hiring tip: You should be promoting from within. If you don’t have somebody qualified, hire an existing 1st line manager and you’ll retain them much longer.

VP of Sales

In this market, this position has the highest turnover rate. Especially if the company is VC funded or backed by a PE firm. Not making revenue projections to get that next round or the stock price is low? A change in the VP of Sales is often made to appease VC’s, PE executives, board members, and fund managers. A very fulfilling role both monetarily and in terms of helping build something great. Not for the faint of heart; lots of hours and stress. The comp data I have for this position is for a true VP of Sales, not a CRO.

Hammer hiring tip: Most companies use a committee hiring approach, using 3-4 high individuals to evaluate the candidates. Make sure they all agree on what makes the optimal candidate or you’ll never make a hire. For those of you looking to add sales talent, time is of the essence. This is the busiest hiring time of the year. Companies are looking to add AE’s and get them ramped before the 1st of the year. If you’re not seeing A level talent quickly from your current talent strategy, we would love to earn your business.

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