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What are the kinds of formulas for commission-based remuneration for sales? I'd particularly like to know what is standard (are there standards??) in large purchase construction/remodeling work. In other words, for making a sale of a $20-50K skilled trade project, what might be the percentage commission?
 

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I guess I was hoping to hear from people who've actually done commission-based sales...
 

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I've done it for years. Several different ways.

1) Straight up commission sales in cutting tools. I made 20% on any sale of 50,000.00 or less 15% above 50K

2) Salary plus commission. 50K base salary, 20% commission after my sales reached a total that would gross in excess of 50K

3) Salary plus commission on growth. This is what I do now. 52K base salary, 5% on growth from 0-10%, 7% on growth above 10%. Company car, 1% maintanence commission, free gas even on my time, and incredible family health, dental, vision insurance with no deductibles for 100.00/month. 3 weeks vacation, 13 paid holidays, and they pay for my internet, cell phone and home phone.

I could make a lot more money up front, but it was the benefits I was after as my wife has major health problems. Straight up commission. Do NOT take less than 15%-20% unless they are footing the bill for your fuel, communications etc...Hope this helps.


I guess I was hoping to hear from people who've actually done commission-based sales...
 

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What are the kinds of formulas for commission-based remuneration for sales? I'd particularly like to know what is standard (are there standards??) in large purchase construction/remodeling work. In other words, for making a sale of a $20-50K skilled trade project, what might be the percentage commission?
Ok, as a real estate agent, I derive my income based on commissions with no base pay. our office operates on a 5 to 7 percent commission, depending upon the particulars of a given piece of real estate, I have also worked with a lesser percentage on very large sales. Each commission is negotiable depending upon circumstances of the listed property. Once the listing commission has been established, this determines the amount of actual cash that will be coming into the brokers hands once the property has been sold. That amount is then divided between the broker and two other parties, the listing agent and the sales agent. These comissions will vary depending upon how long the agent has been with the company, their track record and various other things. In our office we deal with a basic 25 percetn o going to the listing agent, another 25 percent going to the selling agent, the broker keeps the other half. In my case I receive several extra percentage points above the 25 percent due to a long history of performance. What this boils down to is that if I list a property, and sell it myself, my take is a bit over half of the average 6 percent charged. Lets say I list, and sell a property at 100k final sales price, the office takes in 6k on the norm. I would reicieve in the neighborhood of 3500 if I successfully conclude said sale and all the checks clear the banks. If I list the property and another agent sells it, I would recieve half that amount. If I sell another agents listing, the same rules apply and I would have earned the 1750 or so. Again, these percentages are not always the same, it all depends on how the listings are done, and agreements made between brokers and agents but thats sort of the average. When I worked as an auto mechanic many years ago, I was again paid strictly commission basis no base salary. In the seventies I worked on 50/50 basis of labor charges. The labor rates at that time were around 10 per hour. A job calling for 2 hours by the book time paid me 10 bucks, if it took me half a day, I earned 10 bucks, if I could complete the task in an hour, I still made 10 bucks. I averaged in the range of 80 to 100 "book" hours a week. I recall loving clutch jobs on the Saab 99's, the book called for 7 1/2 hours, as we supposedly had to remove the engine and transmission, separate them and install the clutch peice and then reassemble everything, but I figured out a way to do the whole thing in the car without pulling the engine and tranny so I could do them in about 30 minutes. :) In answer to your question, the world is based on negotiations, make your best deal that you can live with and do your best to keep up your end of whatever bargain you make. :)

Edited to add: never let the factory rep observe your work if yer doing a job in a tenth the time the book calls for, they will change the book time, and send out insturctions to all the dealers revealing your "trick". ;)
 

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I have lived off of 100% commission for over 15 years.

The bottom line is that the sales person needs to be well compensated for their time.

Can you give more information....the question is a bit vague, with lots and lots of variations that would effect the commission.

Is this an in-and-out sale for the salesman? Or a long, drawn out, keep-the-customer-happy ordeal? Is there in-office support? Is he providing his own truck? Gas? Health insurance? How often do these sales come up? A few times a year, or several a month? Who is responsible for overages on the job? When does the salesman get paid? When the job is billed, or when the company gets paid? How much profit is built into the job? Is he getting paid from the total bill, or the total profit from the job? Company salesman, or independent rep?

Wow...I could go on and on with the questions.

Clove
 

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Wow...I could go on and on with the questions.

Clove
ahh, yuup! and you would still not have enough info. ;) lifes a gamble every time, the best you can hope for is to get what you consider a fair deal along the way. If you get what you pay for, you got a good deal, if you didnt, you got snookered no matter what the price. The tricky part is to know what it is you wanted to begin with. :)
 

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ahh, yuup! and you would still not have enough info. ;) lifes a gamble every time, the best you can hope for is to get what you consider a fair deal along the way. If you get what you pay for, you got a good deal, if you didnt, you got snookered no matter what the price. The tricky part is to know what it is you wanted to begin with. :)
Very true!

I will add that a good salesman, a person that can close the deal and still have a happy repeat customer is worth his/her weight in gold.

Clove
 

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Actually, MinerJohn.. that would be true provided you negotiate a deal above the standard in your industry. If you set your price too low you might think that is good personal economics... people will be attracted to you because you offer a better bargain... but in reality cutting yourself too low a deal, in sales? It says "I'm not confident in my abilities or the value I bring to this transaction." Some people who know you might cash in on the deal, but it will make it, surprisingly, more difficult to sell yourself to people you don't know if you price yourself below market. In the long run discounting yourself will hurt you in sales.

To say nothing of the fact that anyone in the same field you're in won't appreciate having the income bar lowered, so probably won't be enthusiastic about helping you along.
 

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Discussion Starter · #12 ·
Wow! A lot to ponder. I haven't got answers to all those variables, but I'm certainly going to be aware of what questions to ask when the time comes.

If a salesperson prices themself (I know -- this is not a word...) lower, then the company would be able to price the project lower, which would help to increase sales, yes?
 

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Both: I'm am putting together a team to promote solar electric installations. So I am trying to figure out how we'll be compensated.
I think compensation for sales can be really hard to figure out if you don't already have a model to compare to.

I have seen business overpay to the point that they are losing money, or hire a poor salesman that costs way more than he produces.

I have also seen numerous print shops try to hire salesmen, and pay them too little, which happens alot.

For instance, I know a print shop owner that thought he would make millions hiring salesmen. His pay was 10% of the total bill, less typesetting and set-up costs. He expected to keep people employed selling a box of envelopes for $50, and pay them $5, and the salesman would have to deliver the order, and invoice the customer. I used to hear him complain "there are no good salesmen out there to be hired". It is still mind boggling to think that shop owner was that naive, and dumb. (He eventually filed BK, and still owes everyone in town.)

I have also seen shop owners expect immediate results when they hire salesmen. This is an unrealistic expectation, unless they are hiring an established rep with a customer base and has orders in-hand.

All to often, businesses hire sales people and don't have the cash flow or the internal support to keep a good salesman on staff. They often don't realize that good salesmen don't come cheap, and can be hard to find. Alot of good salesmen need a base or draw to get up and running. This can be an expensive investment.

Clove
 
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