# Cost of a Bad Sales Hire Calculator

> A six-step, fully-loaded cost formula: salary, ramp, recruiting, management time, lost pipeline, and vacancy cost, that turns 'this hire didn't work out' into a specific dollar figure you can put in front of finance.

Free calculator/tool for sales leaders. Topic: [Onboarding & Ramp](https://www.peerlab.ai/library/topic/onboarding-ramp/). Published by PeerLab in the [Sales Enablement Resource Library](https://www.peerlab.ai/library/). Source: https://www.peerlab.ai/library/cost-of-a-bad-sales-hire-calculator/

## How to use it

Plug your real salary, ramp, and attrition numbers into the six-step formula, then use the total dollar figure to justify budget for better screening or a mentor program.

## What's inside

- 10 required inputs (salary, ramp length, recruiting cost, etc.)
- 6-step cost formula (direct cost, recruiting, management time, lost pipeline, vacancy, severance)
- A fully worked numeric example with a total
- Sensitivity analysis: 3 levers that move the number most
- Guidance for presenting the number to leadership

Enter three numbers: salary, ramp length, and attrition rate, and this calculator walks you through the full fully-loaded cost of a rep who doesn't make it to month six. Built as a spreadsheet: copy the structure below into Excel/Sheets, or work it by hand with a calculator.

## Inputs (fill these in first)

| Input | Your Number | Notes |
|---|---|---|
| A. Base salary (annual) | $______ | OTE if commission-based, use base only here |
| B. On-target commission (annual) | $______ | |
| C. Ramp length (months to full productivity) | ______ | from Time-to-First-Deal data if you have it |
| D. Recruiting cost per hire | $______ | agency fee, job board spend, internal recruiter time ÷ hires made |
| E. Onboarding/training cost | $______ | trainer time, materials, tools/licenses provisioned |
| F. Manager coaching hours/week during ramp | ______ hrs | |
| G. Manager's fully-loaded hourly cost | $______ | manager salary ÷ 2,080 hours, loaded ~1.3x for benefits |
| H. Months before this hire is let go/quits | ______ | assume 6 for this calculator's default scenario |
| I. Average deal size in this segment | $______ | |
| J. Expected deals per productive month (once ramped) | ______ | |

## The Calculation, Step by Step

**Step 1: Direct cost of employment (salary + comp paid out for months worked)**
`= (A / 12) × H`
*(commission usually near-zero for a rep who doesn't ramp, so exclude B unless they closed something)*

**Step 2, Recruiting + onboarding sunk cost**
`= D + E`

**Step 3, Management time cost (opportunity cost of manager's attention)**
`= F × G × 4.33 × H`
*(4.33 = average weeks per month)*

**Step 4, Lost pipeline / opportunity cost**
This is the big one most calculators skip: the revenue this seat *should* have produced if it had been filled by someone who ramped successfully.

`= J × I × (H − C)`, but only if H > C (i.e., if they left before ramp completed, use 0 for this term)

**Step 5: Cost of vacancy while the seat is refilled**
`= (J × I) × (Average months to refill, e.g. 2)`

**Step 6: Severance / termination cost (if applicable)**
`= [enter flat number, e.g. 2–4 weeks' pay per local policy]`

## Total Fully-Loaded Cost

`TOTAL = Step 1 + Step 2 + Step 3 + Step 4 + Step 5 + Step 6`

## Worked Example

Assumptions: Base salary $70,000, ramp length 4 months, hire is let go at month 6, recruiting cost $8,000, onboarding cost $4,000, manager spends 5 hrs/week coaching during ramp, manager's loaded hourly cost $65, average deal size $12,000, expected 2 deals/month once ramped, 2 months to refill the seat, 3 weeks' severance (~$4,000).

| Step | Formula | Result |
|---|---|---|
| 1. Direct employment cost | (70,000/12) × 6 | $35,000 |
| 2. Recruiting + onboarding | 8,000 + 4,000 | $12,000 |
| 3. Management time | 5 × 65 × 4.33 × 6 | $8,444 |
| 4. Lost pipeline (H−C = 2 productive months missed) | 2 × 12,000 × 2 | $48,000 |
| 5. Vacancy cost while refilling | (2 × 12,000) × 2 | $48,000 |
| 6. Severance | flat | $4,000 |
| **TOTAL** | | **$155,444** |

**That's roughly 2.2x this rep's annual base salary**, for a hire who never became productive. This is the number to put in front of finance when arguing for better hiring screens, a real onboarding program, or a Buddy/Mentor pairing (see the Sales Buddy/Mentor Program Playbook) rather than "we'll just hire more and see who sticks."

## Sensitivity: What Moves This Number Most

1. **Ramp length vs. time-to-termination gap (Step 4)**: the earlier you cut a non-performer relative to normal ramp, the smaller this number gets. Cutting at month 3 instead of month 6 for a 4-month ramp role roughly halves Step 4.
2. **Deal size and volume (Steps 4 & 5)**, this calculator is most punishing in enterprise/high-ACV motions. Recompute for your actual segment, don't use SMB assumptions for an enterprise team or vice versa.
3. **Vacancy refill time (Step 5)**, a healthy pipeline of internal referrals/bench candidates shrinks this dramatically. Track your own average time-to-fill and use the real number.

## How to Use This With Leadership

Run this calculation on your last 3 sales hires who didn't make it past month six, using your actual numbers. Present the total dollar figure alongside the cost of one fix (better screening interview, a mentor program, a longer/richer ramp plan): the comparison, not the abstract number, is what changes budget conversations.