Lead Generation February 2026 10 min read

The Real Cost of Hiring an SDR vs Outsourcing Lead Generation

Hiring an SDR and outsourcing to an agency both have a place. But the true cost of each option goes well beyond the headline number. And making the wrong choice does not just cost money. It costs months of lost pipeline that you cannot get back.

This is not a "outsourcing is always better" article. That would be dishonest. There are situations where hiring in-house is the right move. But most businesses make this decision based on incomplete numbers, and that is where the problems start.

So let me lay out the full cost of each option. Not just the salary or the retainer, but everything that goes into making each one work.

The Full Cost of an In-House SDR

When a hiring manager says "we can get an SDR for 40k," they are looking at one line item. The real number is significantly higher.

Base Salary

In the European market (2025-2026), a competent SDR with 1-2 years of experience commands EUR 35,000-55,000 base salary. Junior SDRs with no experience sit at the lower end. SDRs with proven track records in your industry sit at the upper end or above it.

Can you hire cheaper? Yes. Should you? That depends on whether you have the infrastructure to train someone from zero, which brings its own costs (covered below).

Commission and Variable Compensation

Most SDR compensation structures include a variable component tied to meetings booked, pipeline generated, or deals closed. This typically adds 10-20% on top of base salary.

On a EUR 45,000 base, that is EUR 4,500-9,000 in additional annual compensation. If your SDR is performing well, this number goes up. Which is a good problem to have, but it is still a cost that needs to be in the budget.

Employer Costs

Employer National Insurance contributions, pension contributions, and other statutory costs add 15-30% on top of the total compensation package.

On a EUR 50,000 total comp (base + commission), employer costs add EUR 7,500-15,000. This is money that never appears on a job listing but absolutely appears on your P&L.

Tools and Software

An SDR needs tools to do their job. At minimum:

Total tools cost: EUR 5,000-15,000/year. And that is assuming you are not already paying for some of these. If you are starting from scratch, it is the higher end.

Email Infrastructure

Cold email requires dedicated sending infrastructure. Domains, inboxes, DNS configuration, warmup tools. This runs EUR 500-1,500/month depending on volume.

Annual cost: EUR 6,000-18,000.

This is a cost that many businesses do not anticipate when hiring an SDR. They assume the SDR will send emails from a company inbox. That approach destroys deliverability within weeks. Proper infrastructure is not optional.

Training and Ramp Time

Here is where the hidden costs really start to accumulate.

A new SDR, even an experienced one, needs 2-4 weeks of onboarding before they start doing productive work. They need to learn your product, your market, your ICP, your messaging, your tools, and your processes.

After onboarding, there is a ramp period of 3-6 months before they reach full productivity. During this time, they are learning, iterating, making mistakes, and gradually improving. This is normal and expected. But it means you are paying full salary for partial output for the first two quarters.

What does that cost? If your SDR costs EUR 5,000/month fully loaded and operates at 50% productivity for the first 3 months, that is EUR 7,500 in lost productivity. If the ramp takes 6 months at an average of 60% productivity, the number is higher.

Management Overhead

An SDR does not manage themselves. Someone needs to:

If you have a sales manager, this is part of their role. If you do not, this falls on the founder or a senior team member whose time has a high opportunity cost.

Conservatively, managing an SDR takes 5-10 hours per week of a manager's time. What is that time worth?

Total First-Year Cost: EUR 70,000-120,000+

Let me add it up:

Call it EUR 70,000-120,000 as a working range, with the understanding that the upper end is realistic for a competitive hire with proper tooling.

And this assumes the hire works out. More on that shortly.

The Full Cost of Outsourcing

Agency retainers look expensive at first glance. But the number includes far more than most people realise.

Monthly Retainer

Most B2B cold email agencies charge EUR 1,500-5,000/month. The range depends on:

A typical mid-range engagement sits at EUR 2,000-3,000/month.

What Is Included

A competent agency's retainer typically covers:

This is not a small scope. It covers everything an SDR would do on the outbound email side, plus the infrastructure and tooling costs.

What May Be Additional

Depending on the agency, some services may sit outside the core retainer:

These additions typically add EUR 500-2,000/month depending on complexity.

Contract Terms

Most agencies require a 3-month minimum commitment. This is not arbitrary. As outlined in the cold email results timeline, the first month is setup and initial results, the second month is optimisation, and the third month is where consistent flow begins.

An agency asking for a 3-month commitment is asking for enough time to demonstrate what the channel can actually do. An agency offering month-to-month with no minimum is either very confident or very desperate. Ask which one it is.

Total First-Year Cost: EUR 18,000-60,000

Time to Results: 3-4 Weeks

Unlike an in-house hire with a 3-6 month ramp, an agency with established processes can have campaigns live within 2-3 weeks and producing qualified meetings within the first month.

This speed-to-value difference is significant. Three months of an SDR ramping up is three months of pipeline that does not exist. An agency compresses that timeline dramatically.

Beyond the Numbers: Hidden Factors

The cost comparison above tells part of the story. The rest is in the risks and realities that do not show up in a spreadsheet.

The Cost of a Bad Hire

What happens if your SDR hire does not work out? According to the Recruitment and Employment Confederation, a bad hire at mid-manager level costs a business 2-3 times their annual salary. For an SDR, the cost is lower but still painful: 6-12 months of salary when you factor in recruitment costs, training investment, lost productivity, and the cost of starting the process again.

That is EUR 25,000-55,000 lost on a single bad hire. And you are back to square one with no pipeline to show for it.

How common is this? Sales roles have some of the highest turnover in any function. Not every hire works out, and the ones that do not cost far more than the salary you paid them.

SDR Average Tenure: 14-18 Months

Even when the hire works out, the average SDR stays in role for 14-18 months. Some stay longer. Many do not.

Think about what that means in practice. You spend 3-6 months getting them to full productivity. They perform well for 8-12 months. Then they leave, and you start again. The effective window of peak performance is less than a year.

An agency does not have this problem. If an account manager leaves the agency, the process, data, and campaign history remain. Someone else picks it up. Your pipeline does not stop because one person decided to move on.

Process Survives Personnel Changes

This is an underappreciated advantage of working with an agency. The process is not trapped in one person's head. It is documented, systematised, and transferable.

With an in-house SDR, their approach, their notes, their relationships, and their tribal knowledge walk out the door when they leave. How much of your outbound strategy is documented vs. stored in your SDR's memory? For most businesses, the answer is uncomfortable.

The Ramp Period Is Lost Pipeline

Every month your SDR is ramping is a month your competitors are booking meetings in your market. If ramp takes 4 months and an agency would have been producing from month one, that is 3 months of pipeline difference.

What are 3 months of qualified meetings worth to your business? For most B2B companies, significantly more than the cost difference between the two options.

Scaling: Agency vs. Doubling Headcount

Need to increase outbound volume by 50%? With an agency, that is a conversation about adding inboxes and expanding targeting. It can happen in weeks.

With an in-house team, that is another hire. Another recruitment process, another ramp period, another management burden. The cost and timeline of scaling are fundamentally different.

When Hiring In-House Makes Sense

Despite everything above, there are clear situations where an in-house SDR is the right choice.

You need high volume and have the infrastructure to support it. If your outbound strategy requires 5+ SDRs and you have the management layer to run that team, building in-house gives you more control and potentially better unit economics at scale.

You have an experienced sales manager available. An SDR without management is an SDR who will underperform and likely leave. If you have someone who can coach, train, and hold them accountable, the in-house model works.

You want full control over messaging and process. Some businesses, particularly in regulated industries, need direct control over every word that goes out. An in-house team gives you that.

You are building a sales team, not just generating leads. If the SDR role is a stepping stone to AE, and you are building a full sales organisation, hiring makes strategic sense beyond the immediate cost comparison.

When Outsourcing Makes Sense

You need pipeline quickly. If your sales team has capacity but not enough meetings, an agency compresses the time to results from months to weeks.

You do not have anyone to manage an SDR. A founder managing an SDR is a founder not doing the ten other things that only they can do. If you do not have a dedicated sales manager, outsourcing removes the management burden entirely.

Your volume does not justify a full-time hire. If you need 10-20 qualified meetings per month, that may not require a full-time person. An agency gives you access to the output without the fixed cost.

You want proven infrastructure from day one. Building cold email infrastructure from scratch takes time and expertise. An agency brings infrastructure, tools, deliverability knowledge, and tested processes on day one.

You are testing the channel before committing. Not sure if cold email will work for your market? A 3-month agency engagement gives you a clear answer at a fraction of the cost and risk of a full-time hire.

The Hybrid Approach

Here is what the most sophisticated B2B companies do: they use both. Not at the same time from the start, but in sequence.

Phase 1: Start With an Agency

Use an agency to validate the channel, identify what works, and build pipeline while you focus on closing deals and growing the business. The agency figures out your best-performing segments, scripts, and approaches.

Phase 2: Hire Once You Know What Works

When you have 3-6 months of campaign data, you know exactly what a good SDR needs to do. You know the ICP, the messaging, the objections, the conversion rates. You are not guessing. You are hiring someone into a proven playbook.

This dramatically reduces ramp time and the risk of a bad hire. You are not asking an SDR to figure out outbound from scratch. You are handing them a system that already works.

Phase 3: Transition Learnings

The agency's data, scripts, and processes transfer to your in-house team. You are not starting from zero. You are starting from a position of knowledge.

Phase 4: Keep Agency for Overflow

Many businesses keep their agency relationship even after hiring in-house. The agency handles new market testing, overflow volume, or segments that require different approaches. The in-house team focuses on core ICP and high-value accounts.

This hybrid model gives you the speed and low risk of outsourcing in the early stages, and the control and scalability of in-house when you are ready for it.

Making the Decision

The question is not "which is cheaper?" The question is "which gets me to reliable pipeline faster, with less risk, given where my business is today?"

If you have the management infrastructure, the budget for a 6-month ramp, and the appetite for the risk of a bad hire, building in-house can be the right long-term play.

If you need results quickly, do not have sales management capacity, or want to validate the channel before committing to headcount, outsourcing is the lower-risk, faster path.

And if you are not sure, start with outsourcing. You can always hire later, armed with data and a proven process. You cannot un-hire someone who is not working out without significant cost.

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