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His math is completely skewed. 22 sales a month of a service that charges $200/month will generate $343,200 a year (unless he's assuming 100% churn rate).

At the end of the year, yeah. But at the end of the first month, in order to be able to pay your salesman, he must have done 22 sales. By charging yearly, only 2 sales are needed. That's cash flow.

So yeah, if he does his 22 sales / month, at the end of the first month, you're even, and starting from month #2, you're making money.

Combine this with "It's easier to sell one time a $1000 product than 1000 times a $1 one" and you get the main idea.

Good point! I was talking about startup costs for the first few months of hire as the rep ramps but didn't make that clear at all. I'll update soon.

Edit: Updated now.

Your math is still way off unless you assume 100% churn rate. Assuming a reasonable churn rate in the 2nd month you will have some fraction 22 existing customers paying $4400/mo (not really sure how $4400 breaks even with $4800).

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