For most companies, bringing on a VP of Sales is a major investment. Between base salary, benefits, equity, and hiring costs, that executive hire can easily cost $250k or more per year. And that's for someone who may take months to properly onboard and integrate into your company.
Enter the fractional executive, providing senior-level expertise and leadership on a part-time basis. With hourly rates typically ranging from $150 to $500, fractional sales executives offer the C-suite guidance at a fraction of the cost.
But is it really that simple? Is hiring a fractional SVP just about dividing their rate by 2080 hours to calculate the equivalent annual salary? Here's a look at the true cost calculus behind fractional sales executives.
Fractional executives span a wide spectrum in their offerings. On one end, you have independent contractors who operate on a pure hourly rate model. They fit projects and ongoing work in between other clients, with minimal dedication to your business.
On the other end, you have fractional executives who operate more like interim leaders. They provide strategic guidance at the board level but also get involved operationally. They structure their availability and planning around your key business initiatives.
Most fractional sales leaders fall somewhere in between, blending strategic vision with tactical implementation. However they model their work, the more involved they are in your business, the more it warrants comparison to a full-time executive rather than a consultant.
You can certainly find fractional VPs with hourly rates equivalent to $100k-$150k annually. But the true value they bring goes beyond those nominal savings.
For one, their experience means they can hit the ground running on day one. There's no slow ramp up and learning curve like a new full-time VP. That means they can start driving impact faster, whether it's through better sales processes, compensation plans, or hiring practices.
Enlisting their expertise for a short-term initiative also derisks the investment. If a fractional VP builds your sales playbook for $20k over 2 months, you receive immediate value whether you extend the engagement or not. A mis-hire for a full-time VP of Sales can cost over $250k when you factor in hiring costs, severance, and lost time.
There is also inherent value in having senior-level experience involved in key decisions and initiatives. Founders and business owners often underestimate what they don't know about building a sales organization. A fractional VP provides an objective outside perspective, bringing evidence-based best practices honed over years in sales leadership roles.
That experienced guidance pays dividends across all areas of sales, whether implementing new sales tech, structuring compensation plans, or mapping out a repeatable sales process. Without it, you risk costly trial-and-error and a delayed ramp to productivity.
What's the real cost of waiting 6-12 months to fill an SVP role? The missed opportunities from that role not optimizing your sales engine from day one. For most companies, the difference between mediocre sales leadership and excellence counts for millions in revenue and growth.
The first step in pursuing a fractional VP of Sales is clearly defining the role requirements and expected impact.
Several factors play a key role:
The more clarity you have around expectations, the better you can assess candidates and align on a fair market fee. Overqualified candidates get bored in basic execution roles. Underqualified candidates will miss the nuances of your sales challenges.
Once you have expectations defined, it's time to set a budget. Study job postings to see full-time base salaries. Account for equity with another 25-40% of base. Then consider your fractional hourly rate equivalent against a pro-rated base salary.
For example, budgeting $150k annually for base salary would equate to around $75/hour at 2080 hours. Adding equity, you may budget for $100-$125/hour to attract solid candidates.
Of course, you also want candidates invested in driving outcomes, not just hours. So consider a blended model with a minimum monthly fee plus upside tied to sales growth or other KPIs. Just be cautious about setting unrealistic goals that incentivize short-term actions over long-term growth.
Executive presence also factors into rates. A SVP or C-level executive can command 200-300%+ of base salary. Their commensurate fractional rate may be $250-$500/hour. However, you typically want to match seniority with the role expectations - bringing in a heavy hitter for basic duties wastes their expertise.
One pitfall to avoid is engaging a fractional VP just for tactical do-it-all execution. The fractional executive market is flooded with jack-of-all-trade generalists who struggle scaling beyond that individual contributor capacity. Their low rates seem like a bargain until you realize you sacrificed strategic vision.
Instead, focus on executives who transcend just checking boxes on tasks. You want someone who asks the right probing questions, brings experienced perspectives, and lays strategic foundations enabling scalable growth.
The hours of grunt work will scale better when supported by strategy, vision, and world-class processes. A great fractional VP does less and less of the hands-on work over time by elevating the team. If you're still relying on them to work 50 hours a week in the weeds, they have not done their job.
Finding the right fractional VP of Sales requires both parties to make an investment. You invest budget and provide transparency into goals, challenges, and resources. They invest time into your business, foregoing other opportunities to focus on you.
This arrangement only pays dividends if you commit to act on the insights and guidance provided. Let data and results guide decisions, not just hunches. Give the fractional leader license to challenge the status quo. And be open about what is and isn't working.
With the right chemistry and commitment, a fractional VP becomes an invaluable strategic asset. $150k invested with the right leader has the potential to drive millions in incremental revenue thanks to optimized sales.
So while the cost savings matter, keep perspective on the bigger impact. Your fractional VP of Sales should provide the vision, leadership, and best practices to transform your sales engine. The savvy executive helps you sell smarter. And selling smarter means more revenue, higher productivity, and reduced sales costs.
Invest for impact, not just cost. With the right fractional sales leader, you realize a 10X+ return on that investment through sales growth and operational excellence. The dollars and hours are just means to an end.