Capacity Planning
Modeling how many reps, SDRs, or CSMs are needed to hit revenue targets based on quota, ramp time, attrition, and pipeline assumptions.
Summary: Capacity Planning in Sales
Capacity Planning is the process of determining how many quota-carrying sales reps are required for a revenue organization to hit its board-approved revenue targets (ARR or bookings). It incorporates assumptions about rep productivity, ramp time, attrition, and how quota is distributed to assess whether the current and planned team can deliver the revenue plan.
Why Capacity Planning Matters
Headcount is usually the largest expense in a revenue organization. Getting capacity wrong has clear consequences:
- Too many reps → Overspend on salaries, tools, and management overhead.
- Too few reps → Missed revenue opportunities and underutilized market potential.
Effective capacity planning right-sizes the sales team to the market opportunity and revenue goals.
Key Inputs to the Capacity Model
- Revenue target
The board-approved ARR or bookings goal for the planning period.
- Quota per rep
The individual bookings target assigned to each quota-carrying rep.
- Quota attainment assumption
The expected average attainment per rep, typically 70–85%, not 100%.
- Ramp time
How long it takes a new hire to reach full productivity (often 3–6 months).
- Attrition rate
Expected rep turnover during the period.
- Ramped rep equivalent
A way to normalize partially ramped reps to a fully ramped equivalent. For example, a rep in month 2 of a 6‑month ramp is roughly 0.33 of a fully ramped rep.
Basic Capacity Formula
```text
Required Reps = Revenue Target / (Quota × Expected Attainment)