How to calculate a sales quota
A sales quota is the revenue target assigned to a rep or team. Set it top-down alone and it is arbitrary; set it bottom-up alone and it underreaches. The right quota reconciles the company target with what a rep can realistically produce given capacity and win rate.
Short answer
Calculate a sales quota by working backward from the company revenue target: subtract expected contribution from existing base and non-rep sources, divide the remaining new-business target across reps adjusting for ramp and territory, then apply a coverage buffer so summed quotas exceed the target. Validate that the number is achievable at your win rate.
Step by step
Start from the company target
Begin with the revenue or new-business number the company must hit, then subtract what existing customers and non-rep channels will contribute.
Divide across reps with adjustments
Allocate the remaining new-business target across reps, adjusting for ramp status, territory potential, and segment.
- Prorate quota for ramping reps
- Weight by territory and segment potential
- Sum of quotas should exceed the target (buffer)
Apply a coverage buffer
Set the sum of individual quotas above the company target so the plan still lands if some reps miss.
Sanity-check against capacity and win rate
Confirm each quota is achievable given deal size, win rate, and the pipeline a rep can realistically work. An impossible quota demotivates.
Model attainment distribution
Check that roughly 60 to 70 percent of reps should be able to hit the number. If the model says almost none can, the quota is too high.
How Ardovo helps
Ardovo builds quotas from your target, capacity, and historical win rate, prorates for ramp, and models the expected attainment distribution, so Rook can tell you whether a proposed quota is realistically achievable before you assign it.
Frequently asked questions
Should quotas be set top-down or bottom-up?
Both. Start top-down from the company target, then reconcile against a bottom-up view of each rep's capacity and win rate. A quota that ignores capacity is arbitrary; one that ignores the company target underreaches. The right number reconciles the two.
Why should the sum of quotas exceed the target?
Because some reps will miss. Setting the sum of individual quotas above the company target builds in a coverage buffer so the overall plan still lands even when a portion of the team falls short of their number.
How do I set quota for a ramping rep?
Prorate it against a ramp schedule so a new rep is not held to a fully ramped target in their first months. Judge their attainment against the ramped quota to keep it fair and motivating.