Owners of growing businesses reach a moment where they realize they need real sales leadership. The reps need coaching. The pipeline needs structure. The comp plan needs design. The owner cannot keep doing all of it themselves. So they start looking for a VP of Sales.
What they often discover is that the full time VP market in Toronto and most major North American cities starts at $300,000 in total comp and runs north of $500,000 for senior hires. For a business doing $2M in revenue, that is fifteen to twenty five percent of revenue going to one hire. The math does not work. The fractional VP of Sales is the answer in between.
The full time VP of Sales cost stack
- Base salary in Toronto: $180,000 to $300,000.
- Variable compensation: $80,000 to $150,000 at plan.
- Benefits, taxes, equipment: another fifteen to twenty percent of base, roughly $30,000 to $60,000.
- Recruiting fees: twenty to twenty five percent of base, $36,000 to $75,000 if you use a search firm.
- Ramp time: three to six months at full cost before the hire produces a return.
- Severance risk: if the hire does not work out, expect to pay two to three months of severance to exit cleanly.
- All in first year cost: $375,000 to $625,000.
The fractional VP of Sales cost stack
- Monthly retainer: $3,000 to $10,000 depending on tier. Industry median in Canada is $7,000 to $8,500.
- Annual cost: $36,000 to $120,000.
- No recruiting fee. No benefits. No equipment. No severance.
- Thirty day notice in most engagements. If it is not working, you exit clean.
- Ramp time: thirty to sixty days. Faster because the fractional VP has done this many times across many businesses.
- Risk profile: dramatically lower than the full time hire.
What you trade off
A fractional VP works on your business eight to twenty five hours per week depending on the engagement. A full time VP works on your business forty to sixty hours per week. You trade off hours of attention. You do not trade off skill or operational expertise.
The right way to think about it: a fractional VP is the same level of skill applied with a different intensity. For most businesses doing $1M to $5M in revenue, the fractional intensity is more than enough. The business does not need a full time strategic resource. It needs a part time operational one.
When to hire full time instead
There are three situations where a full time VP is the right call. First, when your business is above $10M to $15M in revenue and the sales operation has scaled to a size where someone needs to live in it daily. Second, when you are preparing for an exit and the buyer expects a permanent sales leader in seat. Third, when your business has an unusual operational complexity (multiple product lines, geographies, or sales motions) that requires daily judgment calls.
For most other situations, the fractional model is the better answer. The math works. The risk profile works. The skill applied is the same. The hours are less. The result is more than enough for the stage you are in.
The bottom line
For a business doing $1M to $10M in revenue, the fractional VP of Sales is almost always the better answer than a full time hire. The math is dramatically better. The risk is lower. The skill applied is the same. The only thing you give up is hours of attention, and most businesses at this stage do not need the hours. They need the operational design and the weekly cadence. That is exactly what fractional delivers.
Service related to this post
Sales Leadership →
Fractional VP of Sales. Weekly pipeline reviews, team coaching, hiring support, role play.