Sales management · Sales expenses
Work out what selling costs you per rupee of revenue before you set a cap.
The sales cost to revenue ratio is what you spend on selling, including travel, phones, hospitality and sales pay, divided by revenue. This page shows the figures to pull, how to compare the ratio with gross margin and with peers, and how to set a target for next year.
Scope, fee, reporting and term are agreed in writing after we have read your brief and spoken to you.
In one paragraph
The sales cost to revenue ratio is what you spend on selling, including travel, phones, hospitality and sales pay, divided by revenue. This page shows the figures to pull, how to compare the ratio with gross margin and with peers, and how to set a target for next year.
The owner of a packaged-snacks distributor in Hyderabad feels that selling has become expensive. Diesel went up, two reps were added and the tea-and-travel line keeps growing. Nobody has divided it by sales. When accounts does, the figure looks worse in one territory and fine everywhere else, and the owner had been about to cut the wrong thing.
The benchmark is three numbers on a sheet: selling expense as a share of revenue, total cost of selling (expense plus sales pay) as a share of revenue, and the same figure as a share of gross margin. The last one counts for more, since a business on a thin margin cannot carry a ratio that a high-margin business can.
The owner reads the page, accounts pulls the figures and the sales manager owns the per-rep table. Your CA can confirm what counts as selling expense in your books. Benchmarks come from published sources, so treat them as a guide to your own history, not a verdict.
It follows the claim workflow, which gives you clean expense data, and it feeds the quota and target pages, because a cost cap per rep comes from this ratio.
Where this sits
Topic 8 of 14 in sales management: sales expenses. Policies and controls for the cost of selling.
- The topic before
- Compensation
- The topic after
- Quotas and targets
If you want this done for you
The weekly review argues about numbers because everyone is counting something different.
The work
What this is actually like.
“Share of margin tells you more than share of revenue”
Ten rupees of selling cost on a hundred rupees of sales looks the same for two firms. If one earns twelve gross and the other forty, one is nearly out of profit. Always work out both, and show them side by side to the owner.
“Listed competitors publish a rough guide”
Listed companies in your trade report selling and distribution expense in their annual reports. A small firm will differ in scale and mix, so use the number to see whether you are in the same region, not to match it to the decimal.
“Per-rep ratios find the outlier”
Divide each rep's claims by that rep's sales. One rep far above the rest may be in a new territory, on a long cycle, or padding. One far below may be skipping calls. Only the per-rep table shows either.
“A cap set in anger gets ignored”
Cutting the ratio by a fixed share across the board punishes the rep in a costly territory and rewards the rep in the easy one. Set the target by territory, using last year's ratio and what the territory is meant to do next year, whether that is to grow, to hold or to be wound down.
What we do
What you end up with.
The documents this topic produces, what each one is for, and how you know it is finished.
The annual figures sheet
Revenue, gross margin, and each selling cost line: travel, conveyance, lodging, hospitality, phone, and sales pay. Accounts fills it from the books for the last full year, and each line carries the ledger it came from.
Result: Finished when the lines add to the selling total in the books with no leftover.
The three ratios
Selling expense over revenue, total cost of selling over revenue, and total cost of selling over gross margin. Calculate each for the year and, if the records allow, for each quarter.
Result: Finished when the owner can state all three from the sheet without opening the books.
The benchmark note
Two or three comparison figures with their source, such as a listed peer's annual report, a trade association's survey or your own earlier years, and a sentence on how your business differs from each.
Result: Finished when each comparison names its source and its difference.
The per-rep table and target
One row per rep: sales, expense, ratio. Next to it the target ratio for next year for each territory and the cap in rupees. The owner approves and the sales manager shares it with the reps.
Result: Finished when each rep knows their own target ratio and the date it will be looked at.
Why us
Why owners pick GullySales over an agency.
Marketing and sales, as one job
Most agencies stop at the enquiry. We also fix what happens after it: the reply, the follow-up, the quote and the CRM.
The person on the first call does the work
No account managers in between. You are never handed to someone you have not met.
A baseline before anything starts
Your numbers are written down on day one, so every later report compares against something honest.
The fee in writing, split three ways
Our time, your media spend and production on separate lines. You always see what goes to us.
No guarantees we cannot keep
The term is agreed in writing and never a default twelve months. We never promise a ranking or a lead count, because nobody controls those.
One office, and we say so
Nagarbhavi, Bengaluru. We work across India by call and WhatsApp and travel when a session needs to be in person.
#257, 3rd floor, Sri Nanjundeshwara Complex, Nagarbhavi 8th Block, Outer Ring Road. How we work.
Your brief
Tell us what you need, and we will read it before we call.
Eight short steps about your business, what you want and who decides. Most questions are a tap, and you can skip any you would rather answer on the call.
FAQ
Questions owners ask before they call.
Not here? More answers, or ask on WhatsApp.
What is a good sales expense ratio?
Should sales pay be included?
Where do we find a benchmark for our trade?
How often should we recheck?
How much does it cost?
How long is the contract?
How soon will we see results?
Who will actually do the work?
What do you need from us?
What if we are not happy with the work?
Where to go next
The work that carries this topic further.
The rest of sales expenses
Or read all of sales management.
Your next practical step
Tell us what you are trying to grow, and we will read it before we call.
Eight short steps, mostly taps. Skip anything you would rather answer on the call.