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Paying a sales person

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Forum topic by nate22 posted 731 days ago 1107 views 0 times favorited 14 replies Add to Favorites Watch
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nate22

424 posts in 1500 days


731 days ago

I am in the process of hiring someone to be a sales person for me. My question is how should I pay him at first like say the first couple weeks to a month. Should I pay him hourly, salary, commision or hybrid. What would you guys do. And I am not familier with hybrid the guy asked me that to. What does that mean. Any helpfull advice would be great.

-- K & N Furniture Middlebury, In.


14 replies so far

View Puzzleman's profile

Puzzleman

328 posts in 1569 days


#1 posted 731 days ago

I pay my sales person on a strict commission basis. This way I only pay for performance. The more she sells, the more she makes. The more she sells, the more I make.

If the person is a good sales person, they should not be afraid of strict commission.

-- Jim Beachler, Chief Puzzler, http://www.hollowwoodworks.com

View Loren's profile

Loren

7389 posts in 2273 days


#2 posted 731 days ago

Well, either you’re paying them for their time and they sort of stick
around or you pay them for performance and if your product is at
all difficult to sell they will quit (and usually not tell you).

Most of the guys who will want the job will be far better at
selling themselves to you than in getting out there and selling
your product.

If you got the guy sitting in your office making calls where you
can keep an eye on him, then you can pay him hourly, but
if the cat wants to work in an outside, self-supervised capacity,
I would pay only for performance to start. Just don’t be
surprised if you have several of these commission-only guys
take the job and quit before you know it.

-- http://lawoodworking.com

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JayT

2171 posts in 836 days


#3 posted 731 days ago

Hybrid is a base wage, plus commissions. Usually the commission rate will be much lower than strictly commissions. It is not uncommon for some sales jobs to start out this way, especially for a new vendor, as it gives the salesperson some income while establishing accounts and still giving them the motiviation of the commission. Most times it will transition to commission only after a specified period, say two months or so.

Edit: I would only pay hourly, salary or hybrid to an inside salesperson where you personally can account for their hours and production. Any outside sales would be commission only.

-- "The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money." Alexis de Tocqueville, 1835

View Earlextech's profile

Earlextech

958 posts in 1315 days


#4 posted 731 days ago

I was in cabinet sales/design for over 25 years. Straight commission, 10% on top of your required price. Most salespeople will fall by the wayside quickly if not capable. Pay based on collections. Subtract for sales mistakes.
Sales is not for the weak of heart, throughout my career many people complained that they could do my job, many were given the opportunity, all but a couple failed, quickly.

-- Sam Hamory - The project is never finished until its "finished"!

View RetiredCoastie's profile

RetiredCoastie

999 posts in 1808 days


#5 posted 731 days ago

Set it up as a probationary position to give you time to evaluate their attributes such as work ethic. Start with a commission with a performance based bonus at pre-determined amounts of total sales. A lot would depend on appearance, attitude and customer care. Are you in a brick and mortar location or mail order / internet or a combination of both?

-- www.thepatriotwoodworker.com Proud Supporter of Homes For Our Troops

View AngieO's profile

AngieO

1135 posts in 772 days


#6 posted 731 days ago

I agree with others are saying. I’ve been in sales myself and while a hybrid pay would be awesome (to receive) I think it could drain your pockets pretty quickly. Unless you have lots of money to throw at a sales person, you really need the commission based pay to push for the sales.

View Cliff De Witt 's profile

Cliff De Witt

128 posts in 1317 days


#7 posted 730 days ago

Do you have a customer base, does he?
If you do will he be working with that base?
If he will be, will he get paid on that base?

If you are both starting from scratch and do not have a steady order flow at the moment, I would go with a Hybrid for a set period say 90 days, after that time if the orders are not there he will not be either. I would expect a weekly review with strong follow up on both sides. So you can both know what to expect.

If he has a base of customers that he can bring to you then I would pretty much follow the same thing, but what is your sales cycle? I have worked like a dog on orders that took 6 months from initial conversation to order. The fact that I was not producing income was not because I was playing golf. If he brings in orders the first week from his old customer base all the better, but again as someone mentioned I would set any commissions on payment of invoice if you offer net terms that automatically means 30 days with no commissions.

Is he calling on consumers or retailers? Do you have a store front? What do you make? Do you custom make every piece or is it pulled from stock? Are there repeat and or multiple sales?

What is your deliver schedule? If he brings in an order today and you can not deliver for three weeks because it takes that long to produce the product, again the Hybrid covers you both.

Not a whole lot of information from the OP.

I would not work for someone that would assume that I will only take the money and not work for it. That just shows a decided prejudice from the start, if the salesperson is a profession he should be respected as one.

-- Trying to find an answer to my son’s question: “…and forming organic cellulose by spinning it on its axis is interesting, why?”

View Loren's profile

Loren

7389 posts in 2273 days


#8 posted 730 days ago

One thing I noticed in working with sales people is that
they aren’t all marketers. That means that if you give them
a list of people to call they will do it, but I found that when
instructed to develop a list on their own, they wouldn’t be
enthusiastic about it.

If you can find somebody who is already selling product lines
to the sort of stores that might buy yours, that would be
somebody who brings an asset to the table: his or her
relationships and experience with appropriate buyers.

-- http://lawoodworking.com

View Jamie Speirs's profile

Jamie Speirs

4109 posts in 1481 days


#9 posted 730 days ago

Commission only

If they sell they make money

I pay a hefty commission though as a good sales

person or agent is worth it. I’ve one that does the

USA market and they get better prices than I would

dare to have asked.

Jamie

-- Who is the happiest of men? He who values the merits of others, and in their pleasure takes joy, even as though 'twere his own. --Johann Wolfgang von Goethe

View crank49's profile

crank49

3366 posts in 1596 days


#10 posted 730 days ago

I’ve never been in comissioned sales, other than TV repair technician where I got comission on parts. Never occurred to me (I was just 18 years old) why some guys in the shop made twice as much as me when I fixed just as many TVs as they did. Nieve. They were selling parts that didn’t need replacing. But, you know, I’d still be starving in that job because I wouldn’t do people that way.

Anyway, that shop, and many others I have known pay a draw, a base minimum that’s about minimum wage, then don’t pay any comissions till the draw is covered. That way, if there is bad weather, or people are spending all their money getting the kids started in school, or for what ever reason that is beyond your control, you know you will at least have a little bit of income. But, at the same time, if you are hot as a firecracker and sales are really good, you will be rewarded.

-- Michael :-{| “If you tell a big enough lie and tell it frequently enough, it will be believed.” ― A H

View Mainiac Matt 's profile

Mainiac Matt

3872 posts in 953 days


#11 posted 730 days ago

Here’s some things to consider and distinguish between….

Is the guy/gal coming with their own “book of business” (i.e. customer base that buys you type of product) ... if so, they should be paid more for bringing new customers to the dance floor. Or ….. is he/she calling on a list of existing customers (house accounts).... this is more of a customer service rep. / account manager on wheels…. and would merit a lesser rate of compensation. Years ago when I was in outside sales, I received one rate of commission on house accounts that I serviced and another, much higher rate of commission on new business that I brought in.

Who’s paying the sales reps expenses …. typically car allowance and or cell phone allowance… but can also include other travel expenses, and entertainment/meals (if they are buying prospective customers lunch).

If you don’t want the person to develop a large list of new customers, only to take them to your competition in five years when you aren’t willing to increase their compensation, you should give consideration to having them sign a non-disclosure, non-compete agreement as a condition of employment.

-- Pine is fine, but Oak's no joke!

View MNgary's profile

MNgary

235 posts in 1042 days


#12 posted 730 days ago

Before deciding you need to research whether the IRS and/or your state government will agree on the person’s status as an independent contractor versus an employee regarding minimum wage laws, withholding, unemployment insurance, FICA, etcetera.

-- I dream of the world where a duck can cross the road and no one asks why.

View Jim Jakosh's profile

Jim Jakosh

11281 posts in 1730 days


#13 posted 730 days ago

Start with commission only. If he proves to be really good, then consider a hybrid set up. Don’t get locked in to an expense without results

-- Jim Jakosh.....Practical Wood Products...........Learn something new every day!! Variety is the Spice of Life!!

View doordude's profile

doordude

1085 posts in 1608 days


#14 posted 727 days ago

the hybrid is the fairest method, a sales person, could starve,on straight commision before your product gets off to a good start.
there is a lot of factors that are mentioned with the other LJ’ers already stated about the product itself.
he who has the gold makes the rules; but why set up your employee to stumble out of the gate? and both parties loose. everyone thinks selling is easy,or the sales person, goes and play’s golf and dines with customers every other day.a good hard working person doesn’t do that,unless you get a young guy that generaly works for less. with no track record or history of selling. so find a guy or gale that your comfortable with,and hire them. then both of you can make some money. 30 years and counting,as outside sales.

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