# Quota-Setting Calculator

> Reverse-engineers fair, achievable individual quotas from a top-down revenue target and validates them against real territory capacity, with a fairness audit to catch quotas that look reasonable on a spreadsheet but can't actually be hit.

Free calculator/tool for sales leaders. Topic: [Sales Leadership & GTM Strategy](https://www.peerlab.ai/library/topic/sales-leadership-gtm-strategy/). Published by PeerLab in the [Sales Enablement Resource Library](https://www.peerlab.ai/library/). Source: https://www.peerlab.ai/library/quota-setting-calculator/

## How to use it

Calculate the top-down number first, then run every territory through the bottom-up capacity check before quotas go final: any territory scoring below 3x quota in the capacity check gets rebalanced or re-quota'd before rollout, not after Q1.

## What's inside

- Top-down quota formula (revenue target ÷ weighted FTE reps)
- New-hire ramp quota schedule (25/50/75/100 by month)
- Bottom-up territory capacity formula for validation
- Fully worked example, including a red-flag scenario
- Reconciliation rule: escalate if top-down vs. bottom-up gap exceeds 15%
- Territory equity / fairness audit checklist
- Guidance on separating new-logo, expansion, and renewal quota

## Step 1, Top-Down Baseline

**Baseline Quota per Ramped Rep = Total New-Business Target ÷ Weighted FTE Reps**

(Weighted FTE accounts for reps who aren't ramped for the full year, see the Headcount & Capacity Planning Calculator for the weighting method.)

**Worked example:**
- Company target: $10,000,000 net-new
- Headcount: 15 reps (12 fully ramped, 3 new hires averaging 0.5 weighted FTE each)
- Weighted FTE = 12 + (3 × 0.5) = **13.5**
- Baseline quota per ramped FTE = $10,000,000 ÷ 13.5 = **$740,740 → round to $740,000**

## Step 2, New-Hire Ramp Quota Schedule

Don't give new hires a $0 quota during ramp, it hides real signal and breaks the forecast. Use a reduced-quota schedule instead:

| Month | Quota (% of full) |
|---|---|
| 1 | 25% |
| 2 | 50% |
| 3 | 75% |
| 4+ | 100% |

## Step 3: Bottom-Up Territory Capacity Check (validation, not the primary method)

**Territory Capacity = (# accounts in territory) × (historical win rate %) × (average annual contract value)**

**Red-flag example:**
- Territory: 200 named accounts
- Historical win rate: 12% per year
- ACV: $15,000
- Territory Capacity = 200 × 0.12 × $15,000 = **$360,000**
- Assigned quota (from Step 1): $740,000
- Capacity ÷ Quota = 0.49x

**🚩 Red flag:** capacity is under half of assigned quota. Either the territory needs to expand (more named accounts), the quota needs to come down, or leadership needs to consciously accept sub-100% average attainment as the plan: but this should be a deliberate decision, not a surprise discovered in Q3.

**Rule of thumb:** flag any territory where Capacity < 3× Quota for review before rollout.

## Step 4: Reconciliation Rule
If the gap between the top-down number and the bottom-up (capacity-validated) number exceeds **15%**, escalate before finalizing: either the company target is unrealistic given current territory design, or territories need rebalancing (see the Sales Org Design Blueprint's redesign trigger checklist).

## Separating Quota Types
Don't blend new-logo, expansion, and renewal into one number unless one rep truly owns all three motions. If roles are split (AE = new-logo, CSM = expansion/renewal), quota each role against only what they control, a blended number makes accountability impossible to trace.

## Territory Equity / Fairness Audit Checklist
- [ ] Do all reps have comparable territory *potential* (dollar potential, not just account count)?
- [ ] Are new-logo and expansion/renewal counted separately, or blended?
- [ ] Does the ramp schedule match your actual historical average time-to-first-close, not an aspirational number?
- [ ] Is any rep's quota more than 40% above the team median without a corresponding senior-territory justification?
- [ ] What % of reps hit quota at 100%+ historically? If it's below 60%, the quota-setting method itself may be the problem, not the reps.