Last updated: July 2026
The budget conversation for a new sales role usually starts and ends with base salary. Then the role goes live, the real costs land, the revenue doesn't arrive on the spreadsheet's schedule, and the hire gets called a failure at month nine for being exactly on track.
Budgeting a new role or territory properly means three numbers, not one: what the role truly costs in year one, when it breaks even, and what it has to return at maturity to be worth doing. Here's how I'd build each one for an Australian building products business.
What does a new sales role actually cost in year one?
Roughly 1.3 to 1.5 times base salary in cash and on-costs, before you count a dollar of the recruitment or the ramp.
Take a $120k base territory role and walk the stack:
- Base: $120,000
- Super at 12%: $14,400, and remember super applies to commissions too, not just base
- Variable at target: $20,000 to $30,000 for a territory role, more for a hunting BDM
- Car or allowance: $15,000 to $25,000, and a fully maintained company car can add $15,000 to $25,000 in FBT and running costs on top
- Tools: phone, laptop, CRM seat, samples, PPE, trade show and travel budget, typically $8,000 to $15,000
- Payroll on-costs: workers comp and payroll tax, another 5 to 7% depending on state
That $120k role lands somewhere between $180k and $210k of real year-one cost. Add recruitment, whether that's a fee or the internal time to run it properly, and onboarding time from your existing team, which is real cost even though it never gets a line in the spreadsheet.
If the hire goes wrong, the number gets much worse. I've broken that down separately in the cost of a bad sales hire, and the cost of a bad hire calculator will run your own numbers. Budgeting the role honestly at the start is the cheapest insurance against it.
How long until a new sales role breaks even?
In building products, plan for 12 to 18 months, and longer for specification-led roles.
This is the number that kills more new territories than any other, because the budget assumes revenue arrives like a salary, in twelve even instalments. It doesn't. A new rep in a new territory spends months one to three learning the product and the patch, months three to nine building pipeline, and only starts converting at a real rate in the back half of year one. If the product is specified rather than bought off the shelf, the spec-to-order cycle adds 6 to 24 months on top.
So the budget needs a J-curve, not a straight line. In practice that means:
- A ramped target. Something like 25% of run-rate quota in Q1, 60% through the middle quarters, 100% from the start of year two. The same ramp logic applies to the comp plan, which I've covered in designing a sales comp plan for a building products BDM.
- A funded gap. The difference between cost and gross margin contribution in year one is an investment line. Put it in the budget as one. If the board sees "territory investment: $140k year one, breakeven month 14" they can make a decision. If they see a rep "missing budget" for three quarters, they make a different one.
- Leading indicators in the budget review, not just revenue. Pipeline built, accounts opened, specs written. Revenue is a lagging indicator of whether the territory is working. If you wait for it before judging the role, you'll judge it wrong in both directions.
How do you work out what the role needs to return?
Backwards from gross margin, not forwards from a revenue guess.
The maths is short. If the role costs $200k a year fully loaded and your blended gross margin is 30%, the role covers itself at about $670k of incremental revenue at maturity. At 25% margin it's $800k. Set the maturity target at a sensible multiple of breakeven, usually 2x to 3x, and you've got your answer to "is this territory big enough to bother with": the patch needs to hold $1.5M to $2.5M of winnable revenue, at your margin, inside three years.
Two refinements make the number honest.
Separate inherited revenue from created revenue. If the new territory already ships $1M through existing accounts, that revenue doesn't validate the hire, and it shouldn't pay the rep full commission either. Budget the role on incremental margin only.
Match the revenue shape to the role type. A trade or merchant-facing rep builds revenue in a fairly steady curve. A specification role builds a pipeline that converts in lumps, later. Which brings us to the real strategic question.
Should the first hire in a new territory be a BDM or a spec manager?
If revenue exists to be captured now, hire the BDM. If demand has to be created at design stage first, hire the spec role and budget a longer runway.
This decision changes the entire budget shape. A BDM-first territory can plausibly break even inside 12 to 15 months. A spec-first strategy might not invoice materially for 18 months, and then compound for years. Both are valid. What's fatal is funding a spec-first strategy on a BDM-first budget and pulling the pin at month ten. I've written a full comparison in Spec Manager vs BDM: the hiring guide, including which one to hire first for a new product launch.
Whichever way you go, set the KPIs to match the role, not the budget's anxiety. Activity and pipeline measures early, revenue measures once the cycle allows. The frameworks are here for spec managers and account managers.
What goes in the business case?
One page. Five numbers and a review date.
1. Fully loaded year-one cost, built from the stack above, not just base.
2. Breakeven month, stated plainly, with the funded gap shown as an investment.
3. Maturity return, incremental gross margin at year three against total cost to get there.
4. Leading indicators for quarters one to four, meetings, accounts opened, pipeline value, specs written, so progress is visible before revenue is.
5. The exit test, agreed in advance. What you'd need to not see by month 12 to call it wrong. Agreeing this up front stops the month-nine panic and protects a good hire on a normal ramp.
A business case in that shape gets approved faster, and more importantly it keeps everyone honest on both sides of it.
If you're building the business case for a new role or territory and want the market numbers to put behind it, book a 30-minute call. I'll tell you what the role should cost and who's actually available for it.