Understanding the True Cost of Hiring an SDR

Understanding the True Cost of Hiring an SDR

The coffee machine before a Monday morning meeting. The colleague who knows how to unjam the printer. The mute button during a company all-hands. 

All of these are essential to our working days – and you know who else is? 

The SDR. Without them, sales teams wouldn’t have a pipeline to work with: Sales Development Representatives (SDRs) are responsible for finding leads, qualifying them, and setting up meetings for AEs to take. 

They’re a crucial part of any sales team – but sometimes it can be difficult to know when to hire a new one, and when to hold off. After all, there are a lot of hidden costs (money and time-wise) to consider before hiring any new team member – and it might be more appropriate to explore alternative solutions until the time for you to hire is just right. 

In this blog post, we’ll evaluate what hiring an SDR really costs and how you might decide whether to hire one or not. Coming right up: 

Grab a cup of coffee, and let’s get going👇

Defining the Role of an SDR

First of all: what does an SDR actually do? 

Responsibilities of a typical SDR include: 

  • Finding and connecting with potential clients (leads): this is usually done over LinkedIn, email, and the phone. 
  • Qualifying leads to assess fit and readiness: SDRs will research the lead they’re talking to, and then take note of what they discuss to evaluate fit. 
  • Advancing leads to the next stage of the sales process: if a lead is deemed to be a good fit, the SDR will set up a meeting between them and the AE, and pass on any relevant information to both parties before they meet. 

If you’re thinking woah, that’s a lot – you’re right. The average SDR performs nearly 100 activities a day. They’re busy people. 

Without an SDR, we’d simply have no pipeline to work with. As well as assessing whether a lead is appropriate to advance, they also have to convince the lead that what they’re selling is appropriate for their needs. That’s a lot of things to think about at once. 

Breakdown of SDR Costs

The average annual salary for an SDR in the United States is approximately $54,000

It’s important to remember that base salaries can be a lot higher depending on an individual’s experience and location. 

As well as a base salary, you’ll want to consider: 

  • Potential bonus structures
  • Employment taxes and benefits 
  • Recruiting and onboarding costs 
  • Training and development programs 
  • Office space and equipment 
  • Management and supervision overheads 

The Total Annual Cost of an SDR 

As a rough estimate, the total cost of hiring an SDR hovers around $140,000. 

While making the right hire at the right time can be a decision worth its weight in gold, it’s important to note that hiring at the wrong time can go…not so well. If you don’t comfortably have the budget to hire, or you’re under time constraints and won’t be able to train them properly, you’ll waste both money and time – which is not ideal for you, your business, and the candidate, of course. 

So, if you’re not sure you’re ready to hire, how else might you fulfill your lead gen needs?

In-House vs. Outsourced SDRs

Outsourcing SDRs can be a common stop-gap before you hire someone full-time – or in some cases, outsourcing is so successful that it becomes a long-term solution. Let’s compare the two: 

In-House SDRs 

Hire an SDR in-house, and you’ll have greater control over training them and the processes they carry out – which makes for a more consistent prospect experience. It’s also a chance to have a team member who’s aligned with company culture and values. Your team needs to be on the same wavelength if they’re going to truly gel and work well together. 

That said, we also know that hiring an in-house SDR has higher upfront and ongoing costs. They also tend to take a longer time to achieve full productivity, as you have to onboard them into both the role and the business. 

Outsourced SDRs 

First up, it’s cheaper to outsource an SDR than to hire one full-time. You can also scale their efforts up and down as needed, which makes them a cost-effective solution in the long run or if you haven’t quite hit predictable growth yet. 

On the other hand, outsourced SDRs are (obviously) not part of your full-time team. It can be harder to control the quality and consistency of their output. Plus, they have less opportunity to integrate with your internal team – which can make working together a little less smooth than it might be. 

Alternative Solutions: AI-Powered SDR Tools

Still not sure? How about an AI SDR tool

Now, before you start thinking about robots sitting next to your human employees or popping up on your calls – that’s not quite what we mean. Instead, AI-powered SDR tools handle routine sales tasks that don’t require the human touch. 

By that, we mean admin-heavy, manual tasks that often have to be done at scale – think data analytics, for example. These can take up a lot of an SDR’s time, but they don’t really need much of a human touch. The less time your SDRs spend on them the more time they can spend on actually selling. 

AI-powered SDR tools cost significantly less than hiring a full-time SDR (although they do obviously cost something – prices vary significantly). They can also work 24/7 – no weekends or evenings needed for them! This ability makes them a great choice if you’re looking to scale certain elements of your strategy – email outreach, for example. 

Factors to Consider When Deciding

Now, whether you choose to have an AI tool help you, outsource the role, or go the whole hog and hire someone will depend on several factors unique to your business. Let’s run through them: 

  • Company size and stage: are you scaling rapidly, or…are you not quite there yet? Do you have the financial and time resources to support an in-house SDR, or would another solution be more feasible for the moment? 
  • Sales goals and targets: how far away are you from hitting your targets? Could your team meet them with a bit of extra support, or is there a human-sized gap between meeting and missing them?
  • Budget constraints: is hiring someone full-time going to put a strain on your budget? This is a tough position to fill, as the ROI pressure will be on them (and you, as the hiring manager) from the get-go. Or is now the time to make the investment? 
  • Quality vs quantity: what metrics do you have to hit at this stage of the sales funnel? If it’s higher conversion rates, for example, a human might be your best bet. If, on the other hand, you need to scale cold outreach, an AI-assisted tool might be more appropriate. 

 

Let’s Wrap It Up!

Finished your coffee? 

Good – by now you should be full of beans for the day ahead, and feel confident about hiring a new SDR role. Whether you’re choosing to go all-in or holding off until it feels like the right time, knowing you’ve evaluated all the options against your unique situation will help you feel confident you’ve made the right call. 

Targets, here we come.

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Speaking of tools SDRs use…

Whether you go in-house, outsourced, or AI-powered, you’ll need some tools and tech to get them up to speed. Like Surfe, for example. Try it for free.

FAQs About The True Cost of Hiring an SDR

What Is the Total Cost of Hiring an SDR in the US?

The total annual cost of hiring an SDR in the US is approximately $140,000. This figure includes more than just the base salary of $54,000 – it also covers bonus structures, employment taxes, benefits, recruiting, training, office space, and management overhead. These additional costs can vary based on location and experience level. 

What Are the Hidden Costs of Hiring an SDR?

Beyond salary, hidden costs include recruiting expenses, onboarding and training, benefits, employment taxes, and management overhead. You’ll also need to account for time – getting a full-time SDR up to full productivity often takes months. Operational costs like office space, equipment, and software also play a part – they’ve got to have the right tools to work with, after all.  

How Does Hiring an In-House SDR Compare to Outsourcing?

In-house SDRs give you greater control over training and processes, which can improve prospect experience later down the line. However, they have higher upfront and ongoing costs plus longer onboarding times. Outsourced SDRs, on the other hand, are more cost-effective and scalable. They’re ideal if you’re not ready for a full-time hire yet, but may lack the consistency and cultural fit of an in-house team member.

Are AI-Powered SDR Tools a Cost-Effective Alternative?

Yes, AI-powered SDR tools can be a cost-effective alternative to hiring a full-time SDR. These tools handle routine tasks like data analysis and email outreach, freeing up human team members for more strategic activities. While they can’t replicate the human touch, they’re scalable, cost less than a full-time hire, and work 24/7. They’re a great solution if the targets you need to hit are based around more admin-heavy activities, or if you’re not quite ready to hire a human yet. 

When Should You Hire an SDR?

Hiring an SDR is best when your company has the financial and operational resources to support the role. Factors like rapid scaling and a significant gap between you and your targets might signal it’s time to hire. If budget constraints or time limitations for training are there, it may be better to explore outsourcing or AI-powered tools until you’re fully ready.

What Are the Key Factors to Consider Before Hiring an SDR?

Before hiring an SDR, evaluate your company size, sales targets, budget, and specific funnel needs. Are you scaling fast or operating on tight resources? Do you need high-quality conversions or scalable cold outreach? These considerations help determine whether an in-house SDR, outsourced SDR, or AI-powered tool is the best fit for your current stage of growth.