Cost Difference Between In-House SDRs and Outsourced Sales Support

You need sales support. Therefore, you have two options: You can hire and operate a sales team in-house or you can outsource your sales efforts to an external team. There are pros and cons to both. But — since your sales efforts should operate both effectively and affordably — one of the most influential factors is cost.

If you want to figure out which route is the most cost-effective, we’ll save you the math. We’ve compared the cost of hiring and managing an in-house sales rep vs choosing to outsource your sales support. You should select the option that best fits your business and budget.

Difference between in-house & outsourced sales

First, it’s important to note the differences between an in-house SDR and an outsourced sales team. While they perform many of the same functions, there are some distinct differences to note.

An in-house SDR (sales development representative) is typically a sales rep that works out of your business’s physical (or virtual) location, most likely during normal business hours. They are a full-time employee. An SDR's main job is prospecting, cold calling, following up, or nurturing leads. But in many cases, SDRs often have their time and attention pulled away from direct sales duties. SDRs get distracted by phone calls, meetings, emails, and other time-consuming overhead tasks.

Outsourced sales support, on the other hand, allows you to delegate your sales efforts to a third-party service or team that will completely devote their time toward sales activity. 

Once you onboard, you work closely with that external partner who will help you define your strategy, set your objectives, clarify your outreach messaging, and determine your outreach cadences. 

Outsourcing still gives you complete control over how your campaigns run — keeping you in the driver’s seat, but handing off all the manual labor of executing to trusted professionals. Your outsourced sales team essentially takes on much of your in-house sales team’s admin-related responsibilities — leaving them the time to focus on selling, negotiating, and closing deals.

Direct In-house SDR costs

Sales reps can come with talent (and hopefully experience, too). But naturally, that comes at a cost. When hiring a new sales development rep, many businesses only consider base salary as an added expense. 

But there are other expenses to consider, too. 

• Commissions

On top of base pay, SDRs are often paid a commission, which is additional compensation based on meetings booked or sales that close. Though it varies industry-to-industry and company-to-company, an average commission for an in-house SDR is between 20% and 30% of the sale. 

• Bonuses

In addition to their base salary and commissions, many SDRs expect bonuses based on performance, paid either quarterly or annually. The average bonus is between 5% and 15% of an SDR’s annual salary.

• Health insurance

In 2021, the Kaiser Family Foundation estimated the average annual health insurance cost for employers was roughly $6,440 for individuals and $16,253 for families. That cost is only expected to increase over the next 10 years.

• PTO

The average United States worker receives 11 days of paid vacation, 8 days of sick leave, 7.6 holidays, and 20.3 days of paid time off (PTO) every year. All that amounts to 46.9 days off over the course of a year (and bear in mind, days off mean no working and no selling).

• Technology

Be prepared to allocate office space and office equipment to your new hire. Even if your business is 100% remote, there are still fees associated with computers, workstations, phones, software, and more. CRM systems can range from $50-$200/user/mo, sales engagement platforms are usually $50-200/user/mo, lead generation tools are $100-$500/mo, and email automation software can incur fees of $20-$100/user/mo.

• Retirement

401(k) matches and retirement plan contributions have become more and more popular in recent years. During the July 2019 to July 2020 period, Fidelity reported the average employer retirement plan contribution was $3,560 annually. You can expect to pay a more competitive rate to incentivize quality sales reps.

To give you a more in-depth look at what exactly your money is going towards, we’ve broken down the cost of hiring a typical new SDR in the U.S.:

Salary: $30,000 - $60,000/year

Tax: $4,500 - $9,000/year

Medical, dental, & vision insurance: $11,000/year

Life & disability insurance: $2,000/year

401K’s, retirement & pension plans: $2,000/year

Paid sick leave, holidays, & vacations: $5,500/year

Commuting reimbursement: $5,000/year

Child care subsidy & parental leave: $3,000/year

Health & wellness programs: $1,000/year

Bonus pay: $2,000/year 

Software: $2,650-$12,000

Company retreats, team bonding events, & employee outings:  $4,000/year

Lunch, snacks & drinks: $3,500/year

Total: $79,150 - $118,000/year (*Not included commissions)

Non-direct in-house SDR costs

Those fees may seem like a lot already, but keep in mind, hiring and managing full-time employees add other expenses that affect your total overhead. 

You’ll also need to account for:

• Recruitment

To fill job vacancies, you’ll need to invest quite a bit of time and money upfront. From job description writing to hiring ads to background checks and assessments, there’s plenty that goes into bringing on new staff members. If you use a recruiting agency, plan to budget for 15% to 30% of the candidate's annual salary too.

• Onboarding and training

You’ll need to set aside time (which would otherwise be put towards more productive sales work) to onboard and train new hires, educating them on the unique ins and outs of your brand and product.

• Management and overhead

To manage an in-house SDR or team, you’ll need sales managers, HR admins, and other support staff. There should be time devoted to regular 1:1s and training sessions to help upskill your SDR and ensure he/she is constantly improving to reach quota.

Benefits of outsourcing sales support

On the other hand, using an outsourced sales partner can be a more lightweight, streamlined solution. Not only does it completely remove the hiring and training needs that come with a full-time staff member, but cost is also much more affordable and straightforward.

Here’s a list of some advantages of a sales outreach partner: 

• Cost

No need to pay an outsourced SDR’s salary or pay big bucks for insurance, retirement plans, and other benefits or incentives. An outsourced sales service will only require you to pay for their monthly services — nothing else — and that makes it really easy to budget and scale your efforts. 

• Resources

With an outsourced sales team, there’s no need to allocate office space, purchase furniture, or ship new equipment. Your outsourced sales team will equip their SDRs with all the necessary resources — both physical and digital — to get the job done efficiently. 

• Flexibility

Companies can adjust the size of their outreach team based on their lead list size and campaign goals — allowing them to grow or scale back the scope of the effort with ease. This flexibility enables cost savings by reducing staff that’s not needed at that time.

• Expertise 

Outsourcing sales often means gaining access to a team of experienced professionals who specialize in sales and cold calling. These experts bring a wealth of experience and skills to the table, which translates to improved sales performance and results. 

Outsourced sales support costs

To give you an idea of the cost disparity between in-house and outsourced sales support, we’ve broken down the costs of Smith.ai’s outreach campaigns service. 

With a price-per-contact model, campaigns are custom-built specifically for you, your lead list size, and your budget. 

Simply put, it’s $12/contact (200 contact minimum) with a $750 setup fee. 

Let’s say your lead list size is 300 each month. That would be $12 x 300 x 12 months, plus a $750 upfront setup fee. That’s $43,950 for the year. 

And that’s it. 

No overseas agents, no hourly rates, no hidden fees, and no annual contracts. The simple, transparent model allows our clients to more easily make a decision to invest, get up and running quickly, and can flexibly scale up or down the size of the effort. 

Not to mention, it avoids the need for recruitment, hiring, managing, benefits, bonuses, and all the other direct and indirect costs listed above that are associated with having full-time, in-house employees.

Outsource your sales to Smith.ai

Outsourcing through Smith.ai is a great way to get quality sales support at an affordable rate.

1. Don’t waste your limited budget on recruiting, training, and managing part- and full-time staff members. Smith.ai includes North America-based agents, account managers, and support staff in the cost of our services.
2. No need to gamble your time, money, and reputation on low-cost overseas agents. Smith.ai puts customer experience and brand reputation first. We aren’t just calling for your business, we sound just like we’re a part of your team.
3. Our large team of sales-trained agents and our proprietary AI-driven software help us work fast and efficiently, ensuring our agents make the right calls to the right leads at the right time. 
4. We work with you to determine your outreach messaging, your ideal strategy, and your overall objectives — so you’re always in the driver’s seat of your campaigns.
5. We’re expert communicators. We have a team consisting of hundreds of agents specifically trained in outbound calls and campaigns to help you reach your most important business objectives. 
6. We believe in transparency, giving you real-time access to every single interaction we handle on your behalf. Our convenient online dashboard displays every call, email, and text in detail, with access to daily summaries. We integrate with an array of CRM and other business system integrations so you can stay in the loop. 

Smith.ai’s Outreach Campaigns include a number of powerful features designed to improve the efficiency and efficacy of agents’ outreach efforts.

• CRM integration: We offer thousands of native and Zapier integrations, so connecting to your software is easy. 
• Email & SMS follow-up: We’ll send personalized emails and texts straight to your lead list after each call to improve engagement rates. 

• Third-party intake forms: We screen out any unqualified leads obtained from lead-gen tools, web forms, or events using your custom qualification questions.
• Appointment setting: Eliminate back-and-forth phone tag. We book appointments directly on your calendar with qualified leads.
• Outbound business caller ID: We know a familiar phone number gets a significantly higher response rate from leads and customers. That’s why we enable caller ID — any call we make on your behalf appears on recipients’ phones as coming from your business phone number. 

Schedule a consultation today to discuss how Smith.ai’s Outreach Campaigns can expand your sales capacity and expand your revenue potential. Reach out to us at hello@smith.ai or (650) 709-2975.