How do you calculate sales capacity?

Work backwards: target revenue divided by expected productivity per fully ramped seller, adjusted for ramp time and expected attrition. The output is a hiring schedule, not a headcount.

Why does capacity planning usually fail?

Because ramp and attrition are omitted. A seller hired in month one is not productive in month one, and some of the team will leave during the period. Planning on fully ramped headcount overstates capacity for most of the year.

What is ramp time and how should it be measured?

Time from start date to sustained productivity at target. Measure it from your own cohort data rather than assuming a convention — it varies materially by segment and deal complexity.

How does capacity planning relate to territory design?

They constrain each other. Capacity says how many sellers you need; territory potential says how many the market can support. If the two disagree, adding sellers subdivides territories below viable potential.

Capacity Planning

Translating a revenue target into the number of productive selling resources required to hit it, accounting for ramp, attrition and expected attainment.

Working backwards

Start from the revenue target for the period, not from a headcount someone has in mind.
Divide by expected productivity per fully ramped seller, taken from your own attainment distribution — use the median rather than the target, because target attainment is an aspiration.
Adjust for ramp. A seller starting in month four contributes a fraction of a year's capacity, and the fraction depends on measured ramp time.
Adjust for attrition, using your own historical rate. Planned capacity that assumes nobody leaves is systematically optimistic.
Convert to a hiring schedule with start dates, then check recruiting throughput can actually deliver it. A plan requiring twelve hires in a quarter from a function that has never made more than four is not a plan.

Ramp is the term most often dropped

Because it is inconvenient. A seller hired at the start of Q3 with a six-month ramp contributes almost nothing to the year. Omitting ramp is the single most common reason capacity plans overstate what the team will deliver.

Checking against the market

Capacity planning produces the number of sellers needed. Territory design determines whether the market can support them. Where adding sellers means subdividing territories below the potential required to carry a quota, the plan produces a larger team with lower attainment — and the shortfall reads as a performance problem rather than a planning one.

The inputs to measure rather than assume

Ramp time, from your own cohorts, by segment. Convention figures are frequently wrong for a specific motion.
Median attainment, not target attainment. The distribution matters more than the mean.
Attrition, split between regretted and unregretted — they respond to different interventions and forecast differently.
Recruiting throughput and time to hire, which set the ceiling on how fast any plan can execute.

RELATED TERMS

Quota Attainment

The proportion of quota a rep achieved, and across a team, the distribution of that proportion.

Ramp Time

The time between a seller starting and reaching expected productivity. The variable that makes hiring plans wrong when it is guessed rather than measured.

Pipeline Coverage

The ratio of open pipeline value to the target for a period. Answers whether there is enough in play to hit the number at historical conversion rates.

Quota

The revenue target assigned to an individual rep for a period. The most consequential number in a seller's working life, and the mechanism translating a company target into individual accountability.

COMMON QUESTIONS

How do you calculate sales capacity?: Work backwards: target revenue divided by expected productivity per fully ramped seller, adjusted for ramp time and expected attrition. The output is a hiring schedule, not a headcount.
Why does capacity planning usually fail?: Because ramp and attrition are omitted. A seller hired in month one is not productive in month one, and some of the team will leave during the period. Planning on fully ramped headcount overstates capacity for most of the year.
What is ramp time and how should it be measured?: Time from start date to sustained productivity at target. Measure it from your own cohort data rather than assuming a convention — it varies materially by segment and deal complexity.
How does capacity planning relate to territory design?: They constrain each other. Capacity says how many sellers you need; territory potential says how many the market can support. If the two disagree, adding sellers subdivides territories below viable potential.