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Producer Break-Even Calculator

Calculate how many new accounts a producer must write to cover their cost, including renewal commission over several years.

How the producer break-even calculator works

Hiring a producer is an investment. Because renewals keep paying after the first year, the break-even pace over three years is much lower than in year one.

Formula

Year-one accounts = Producer cost ÷ (Average premium × Commission rate). Multi-year pace solves Σ cost = X × revenue × Σ (1 + r + … + r^(k−1)).

How to use it

  1. Enter the producer’s fully loaded annual cost.
  2. Enter average account premium and commission rate.
  3. Enter renewal retention and the evaluation period.

Worked example

A $95,000 producer writing $6,500 accounts at 14% needs 105 accounts in year one, but only about 4.8 a month on a three-year horizon.

Frequently asked questions

How long until a new producer breaks even?

Commonly two to three years, which is why many agencies use a draw or validation schedule.

What is a validation schedule?

A plan of new-business targets the producer must hit for continued employment or salary.

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