posted
Hi all, We are really wrestling with this one. We've had a salaried sales person (our first)for about 4 months now. We've trained him and he is ready to go out on straight commission now. We are baffled on how to compensate him. In 6 to 12 months we'll know exactly how to make it work to both our advantages. However we just can't agree on where to start. Salesperson would like to be payed a monthly advance against commissions earned. Taking into account that we are a small shop: 1)What is a reasonable monthly base rate? 2)What percentage of commission to be payed? 3)How do you handle mileage? Thanks,
posted
I feel, after studying this situation and evaluating it quite a bit, that 7% should work well for both of you. If the sales are below 300.00, I would probably pay 10% and a minimum of 30.00 after that until it hits the 7% scale at about 430.00. A 2500.00 sale would net a salesman 175.00. If you have any good volume of work he and you should do very well. Milage should be easily taken care of in the 7%. As far a base salary, I would only guarantee a reasonable minimum for 6 months, because if it isn't working by then, it just is not going to work. If he is a full time salesperson, you will probably let him/her take care of all calls and sales within the company. By estimating the annual gross sales of your business x7 you will see the annual salary.....Now if he is a working signmaker/installer and is paid a base salary, a commission rate of about half of what I estimated should work. ...Bronzeo
posted
Wow! 7 percent? That's more than a third of the net profit most small shops make on a typical job. Maybe I should sell the biz and just sell for someone else!
------------------ Tim Whitcher Quality Signs & Design 107 E Adrian St Blissfield, MI 49228 qualitysigns@cass.net
Posts: 1546 | From: Adrian, MI | Registered: Mar 1999
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posted
I think you would find a third of net profit cheap. You must remember, it is not from your net profit, unless you have not charged for the hours that it took to handle the sales. This 7% should free you up on a lot of production time. Hopefully we will see some more figures here, but I don't think they will be very far off of this mark. The smaller shops a little higher and the big shops, a little more conservative possibly. I have seen the figures a couple of times before and they nearly always average around 7%. If you don't see more posts, go to search..... type in sales commissions, and see what you get, as it has been answered many times here......Bronzeo.
------------------ Jack Davis 1410 Main St Joplin, MO 64801 www.imagemakerart.com bronzeo@swbell.net http://www.imagemakerart.com
Posts: 1549 | From: Joplin, MO | Registered: Mar 2000
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posted
Great comments, here's some more fuel... 1)Would you differentiate between "house" accounts that the salesperson has nothing to do with and the "their" accounts, which is work you wouldn't otherwise have had? 2)What expenses should the salesperson cover themselves, ie.: car, camera, entertainment expenses? 3)Would you pay them extra for costs such as doing a survey at your request? 4)Would you expect them to be at the office every workday? 5)Should you start with a salary/commission split at first? 6)How much draw against commission should you allow per month and when do you reconcile it?
Wow so many variables.
Please feel free to ask questions about us if it will help. I will e:mail updates as the year progresses to those of you that participate here, or request it.
We are a general sign and screen printing shop, check our website for details. www.commercialsigns.com
I can't answer all your questions, however I might suggest paying a base salary plus commission to start with until the ball gets rolling. Give him a deadline to work with. It may make all the diff, knowing he's taken care of at the startup as he's learning.
I'd say if it's strictly commission, you can't expect him to be in your shop. Strictly commission is sort of like his own biz. Your expectations of him working Mon-Fri 9-5 are ok, however he needs to be on the road in order to make money, so although it will be hard to monitor, if he wants to earn a living, he needs to be moving constantly.
RE: house accounts vs new accounts, what happens if he knocks unknowingly on a door of a long time customer of yours? Awkward at best. Are the chances good that if your salesperson went by foot to a stagnate customer of yours, that he may get a sale? If so, to me that deserves compensation. I'd say, whatever sales HE brings in on paper are his, no matter who the client is. The customers that normally phone you direct are of course yours. Just make sure he understands that HE must do the footwork with the customer, and not have the customer just call in, if you can swing that. Chances are, if your customer is getting personalized service and it's good, he may purchase more, therefore it's better all around.
Re: mileage, call up the govt through the employee standards booklet. Or any govt office in your area. Ask what the current rate for mileage payout is. They always know.
My suggestion is to call up a large print shop in your area. They normally have salespeople on the road just like you're planning to do. They could answer ALL your questions.
------------------ Graphic Impact located in BC Canada gisigns@sprint.ca
[This message has been edited by Donna in BC (edited December 04, 2000).]
Posts: 5630 | From: Yarrow, BC Canada | Registered: Nov 1998
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