At $100K ARR, your sales strategy can make or break your growth. The choice between hiring a sales agency or building an in-house team comes down to budget, speed, and control. Here’s the quick answer:
- Sales Agency: Faster to start, lower upfront costs, but limited control over messaging and customer interactions. Costs range from $5,000–$12,000/month (retainers + commissions).
- In-House Sales: Full control over the process, but higher costs and slower ramp-up. Expect to spend $79,000–$125,000 annually per rep, with months of hiring and training.
Key Takeaway: If you need quick results and have limited resources, a sales agency is better. If long-term control and alignment with your company’s vision are priorities, go in-house. Some startups combine both – start with an agency, then transition in-house as you grow.
Quick Comparison:
| Factor | Sales Agency | In-House Sales |
|---|---|---|
| Ramp-Up Speed | 2–4 weeks | 4–6 months |
| Cost | $5,000–$12,000/month | $79,000–$125,000/year per hire |
| Scalability | Flexible, fast adjustments | Slow, requires significant budget |
| Control | Limited | Full |
Read on for a detailed breakdown of both options to help you decide.
Demand Generation: When to Hire an Agency and When to Go In-House
1. Sales Agency
Sales agencies offer startups with $100K ARR a quick and budget-friendly path to scale without committing to the costs of a full-time team. These agencies come equipped with established systems, experienced professionals, and immediate access to markets, giving your growth efforts a serious boost. For founders who are already stretched thin with product development, fundraising, and daily operations, outsourcing sales can free up valuable time to focus on what matters most. Let’s break down the key aspects – speed, cost, scalability, and control.
Ramp-Up Speed
One of the biggest advantages of sales agencies is how quickly they can get you up and running. Building an in-house sales team takes time – hiring and training an SDR can take 3–6 months before they’re fully productive. In contrast, agencies can start generating leads in just 2–4 weeks. They come prepared with the tools, infrastructure, and seasoned reps who know how to handle different industries and buyer personas. This speed can be a game-changer, especially if you need to strike while the market is hot or show quick results to investors. Plus, their proven strategies spare you the trial-and-error headaches that often come with building an internal team from scratch.
Cost Structure
Sales agencies typically operate on a performance-based pricing model, which works well for startups managing tight budgets. The usual setup includes a monthly retainer ranging from $3,000 to $8,000, along with commission rates of 15–25% on closed deals. For a startup with $100K ARR, this means monthly expenses generally fall between $5,000 and $12,000, including both retainers and commissions. Compare that to the roughly $100K annual cost of hiring an in-house SDR (including benefits, equipment, and training), and the agency model offers a more predictable and performance-driven expense. For example, if your average deal size is $5,000, you’d pay around $750 to $1,250 per closed deal through an agency.
Scalability
When it comes to scaling, agencies have the upper hand. Need to double your outreach efforts? Agencies can typically expand their team within weeks, not months. This flexibility is invaluable when you’re testing new markets, rolling out a product, or dealing with seasonal spikes in demand. However, there’s a catch – agencies often juggle multiple clients, which means they might not always give you their undivided attention during busy times. And as your deal volume grows, building an in-house team could eventually become more cost-effective.
Operational Control
The trade-off for working with an agency is giving up some control. You won’t have as much say over day-to-day activities, messaging, or customer interactions. External reps may not fully understand your company culture or grasp the finer details of your product. While most agencies provide regular updates and are open to feedback on scripts and processes, they lack the flexibility of an internal team when it comes to making quick adjustments. For startups where maintaining brand consistency and delivering a seamless customer experience are top priorities, this loss of direct oversight – and the reliance on an external partner – can be a significant drawback.
2. In-House Sales
Building your own sales team at $100K ARR gives you full control over the sales process but comes with high upfront costs and longer timelines. It allows you to develop deep product knowledge and manage every aspect of the customer experience. Let’s dive into how it compares in terms of ramp-up speed, cost structure, scalability, and operational control.
Ramp-Up Speed
Creating an in-house sales team takes time and effort. Hiring alone can cost around $4,000 per hire and take 4–8 weeks. If you use a recruitment agency, fees can range from $11,000 to $22,000, or 15–30% of the hire’s annual salary. Even after onboarding, it typically takes three months for new hires to reach full productivity. This means you’re looking at a 4–6 month delay before seeing significant results.
Here’s another challenge: sales development representatives (SDRs) have an average tenure of just 14.2 months. Many leave before completing a full year of hitting quotas, forcing you to start the hiring process all over again. This can be especially tough when you’re trying to meet growth milestones or keep investors happy.
Cost Structure
The costs of building an in-house team go beyond salaries. While the average base salary for a sales rep is about $74,000, benefits, training, and software add another $2,650 to $12,000 per year. This brings the total annual cost per rep to somewhere between $79,150 and $125,000.
On top of that, commissions typically account for 20–25% of the Annual Contract Value (ACV). For startups with tight budgets, ensuring your reps generate enough revenue to cover these expenses can be a tall order.
Scalability
Scaling an in-house team isn’t just expensive – it’s slow. Doubling your sales capacity could set you back over $200,000 annually and take months to execute. For startups at $100K ARR, these fixed costs might mean raising more funds or cutting budgets in other areas. Compared to the flexibility of outsourcing to an agency, scaling internally can feel like a much heavier lift.
Operational Control
One of the biggest advantages of an in-house team is control. You oversee every customer interaction, giving you the ability to quickly tweak messaging and processes. Your sales team becomes a direct extension of your company’s vision, helping to build strong relationships with prospects and providing valuable feedback from the market.
You also have the freedom to design custom compensation plans, training programs, and career paths. If market conditions shift or your strategy needs a pivot, your internal team can adjust immediately, ensuring your sales efforts stay aligned with your goals.
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Pros and Cons
Here’s a breakdown of the key trade-offs when deciding between a sales agency and an in-house sales team:
| Factor | Sales Agency | In-House Sales Team |
|---|---|---|
| Ramp-Up Speed | Fast – Ready to operate in 6–8 weeks due to established systems and processes | Slow – Takes several months to deliver results, with full productivity often requiring 6–12 months |
| Cost Structure | Variable – Performance-based fees with lower upfront costs | Fixed – High upfront investment for hiring, onboarding, and training, plus ongoing expenses |
| Scalability | Flexible – Easy to adjust based on your needs without long-term commitments | Less Flexible – Scaling requires significant investment and extended timelines |
| Operational Control | Limited – Day-to-day sales activities and customer interactions are handled externally | Complete – Full control over processes, messaging, and customer relationships |
This table highlights the main differences, but let’s dive deeper into what these mean for your business.
Agencies bring specialists to the table quickly, often ramping up in a matter of weeks. In contrast, building an in-house team takes time – typically several months to get started and up to a year to achieve full productivity. MarketStar research supports this, noting: "outsourced teams consistently drive revenue within four to six months, rather than up to a year by a newly established in-house team."
"Sales outsourcing providers can offer businesses a faster speed to hire, as they have established recruitment and training processes in place." – MarketStar
From a financial perspective, agencies require less upfront investment since their fees are often tied to performance, though costs may rise as your business grows. On the other hand, in-house teams demand significant initial spending for recruitment, onboarding, and training, along with regular fixed costs. For startups operating at $100K ARR, managing these financial demands can be crucial.
The choice often comes down to speed versus control. Agencies offer quick results with their expertise, making them ideal for businesses needing fast traction or meeting tight investor deadlines. In-house teams, while slower to get off the ground, can eventually become a seamless part of your company, reflecting its values and culture.
Ultimately, the best approach depends on your growth stage and priorities. If capturing immediate market opportunities is critical, an agency’s rapid deployment may be the way to go. But if you’re focused on long-term growth and have the resources to invest, building an in-house team could align better with your goals.
Conclusion
When weighing your options, it all comes down to balancing immediate needs with long-term goals. The decision should factor in three key elements: timeline, budget, and vision for the future.
If your priority is quick market entry, a sales agency might be the way to go. Agencies bring specialized expertise, flexible costs, and can help you gain traction fast. On the other hand, if you’re ready to invest in building a dedicated team, can handle a slower start, and value having direct control over customer relationships, an in-house sales team could be the better fit. This route allows you to align the sales process with your company’s overall culture and strategy.
Some startups find success by blending both approaches. For instance, you could start with an agency to validate your market, then transition to an in-house team as your operations grow. This hybrid model offers the speed and expertise of external support early on, while setting the stage for long-term customization and control.
No matter which path you choose, integrating automation tools into your sales process can boost efficiency. If you’re looking for actionable insights on using AI to drive revenue growth, consider subscribing to our AI Acceleration Newsletter for weekly frameworks designed for founders.
Ultimately, the decision should reflect your startup’s financial position, growth stage, and strategic priorities. Agencies offer speed and expertise but less control, while in-house teams provide deeper customization at the cost of slower progress. Align your choice with your current goals to pave the way for sustainable growth as you approach the critical $100K ARR milestone.
FAQs
How do I decide between hiring a sales agency or building an in-house sales team at $100,000 ARR?
When you’re at the $100,000 ARR mark and trying to decide between a sales agency or building an in-house sales team, there are a few important factors to think about:
- Budget: A sales agency can be a cost-effective option with lower upfront expenses. On the other hand, hiring an in-house team means taking on higher initial costs, including salaries, benefits, and training.
- Scalability: Sales agencies are often quicker to adjust to your growth needs. Expanding an in-house team, however, takes more time, effort, and resources.
- Control: With an in-house team, you have more direct oversight and influence over your sales processes. Agencies, meanwhile, tend to operate with more independence.
- Expertise: Agencies usually bring a wealth of specialized skills and market knowledge, which can be a huge advantage if you’re an early-stage startup without an established sales framework.
The right choice depends on your company’s unique goals and resources. Carefully consider these factors to align with your growth strategy.
What’s the best way for a startup to shift from a sales agency to building an in-house sales team as it scales?
Transitioning from working with a sales agency to building your own in-house sales team takes thoughtful planning to avoid disruption. Start by evaluating your budget, operational requirements, and long-term growth objectives. For example, if your business is generating $100,000 in annual recurring revenue (ARR), consider whether that income can cover the expenses of hiring, training, and managing an internal team.
Take a step-by-step approach to shift responsibilities from the agency to your team. Begin by observing the agency’s processes, documenting their workflows, and developing expertise within your company. Recruiting team members with relevant experience and investing in sales tools can help streamline operations and make the transition smoother. The goal is to create a setup that allows for scalability and greater control, ensuring the move supports your startup’s growth plans.
What are the advantages and risks of using both a sales agency and an in-house sales team for a startup?
A hybrid sales approach – blending a sales agency with your in-house team – can be a smart move for startups looking to grow efficiently. This model lets your internal team concentrate on building strong client relationships and crafting the broader sales strategy, while the agency takes care of tasks like lead generation, prospecting, and gathering market insights.
This setup brings several advantages: more flexibility, quicker access to specialized skills, and faster onboarding. That said, it’s crucial to address potential challenges, like mismatched goals or communication breakdowns between the agency and your team. By setting clear expectations, fostering regular collaboration, and defining roles upfront, you can ensure both teams work together smoothly to drive growth.
