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Forum topic by nate22 posted 650 days ago 876 views 0 times favorited 7 replies Add to Favorites Watch
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nate22

424 posts in 1507 days


650 days ago

What is a good rate to pay a sales person on commission. Would like 10 percent be good or more. Any suggestions would be helpful.

-- K & N Furniture Middlebury, In.


7 replies so far

View DS's profile

DS

2131 posts in 1052 days


#1 posted 650 days ago

The only appropriate answer is; that depends.

You have to consider a couple of things.
1) The salesperson is going to want to earn a reasonable paycheck.
2) How much after sale involvement will this person have?
3) What is the overall sales volume of your company – current and projected.
4) The workload required for the person to handle the projected sales volume should be reasonable to a normal work week schedule.

If your sales volume is fairly low, you would want to pay a higher commision, but perhaps require more involvement in each project. I’ve seen some companies require sales and design as part of the package.
If your sales volume is fairly high, you might pay a lower commission, but the salesperson would pass the “after the signature” work (or some other portion of the work) off onto an inside sales staff.

I’ve seen anywhere from 4% to 8% commissions being paid.
A couple examples;
- A $2M/yr sales producer, would earn a nice income at 4%, but wouldn’t necessarily be able to handle after sales project tasks.
- A $500k producer would want to earn closer to 8%, which is a modest income, but you might require involvement in design and coordination of other aspects of the project, perhaps, all the way to closing the job.

All these things depend on your company’s needs at the current moment and for the projected future and should be settled upon as part of the job interview process.

-- "Hard work is not defined by the difficulty of the task as much as a person's desire to perform it.", DS251

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Earlextech

961 posts in 1322 days


#2 posted 650 days ago

As a custom cabinet sales/designer I was paid 10% commission with a draw each week that was reconciled at the end of the month based on collections. I also paid for my own mistakes. So if I ordered the wrong size cabinet for the job, I would own that cabinet. The cabinet shop provided most of the leads but my involvement never ended until the job was complete and paid in full.

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

View Jerry's profile

Jerry

2181 posts in 2178 days


#3 posted 649 days ago

I have also considered hiring a sales person on commission. I have thought about 10%.

-- Jerry Nettrour, San Antonio, www.topqualitycabinets.net

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nwbusa

1016 posts in 918 days


#4 posted 649 days ago

I guess the question is, 10% of what? Gross profit? Net? Revenue?

I know that in some industries (RV sales, for example) sales people earn as much as 25% of the net profit as their commission. Sometimes it goes on a sliding scale, such as 20% of the first $1K profit, 25% on the next $1K, and 30% of anything over $2K of net profit.

-- John, BC, Canada

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Jerry

2181 posts in 2178 days


#5 posted 649 days ago

A sliding scale seems like a neat concept. I have sort of thought of something like that. For example, if a salesman sells the cabinets for 170.00 LF, I would provide a 5% commission (mainly because not a lot of profit at that price) and up to maybe 20 to 25% of profit for sales prices in the upper 200 LF range. But I don’t know and I hate to dive into something I know little about.

But the idea intrigues me, as it would do two things for us, possibly keep us more steady and free me up from sales and design.

-- Jerry Nettrour, San Antonio, www.topqualitycabinets.net

View Paul Miller's profile

Paul Miller

29 posts in 2085 days


#6 posted 649 days ago

10% seems a bit low to me. I’ve never used a salesman as such, but I’ve had my stuff in consignment shops where 25% is pretty standard in my area. Some places want 30%. I know I wouln’t want to do it for 10%.

Paul

View YanktonSD's profile

YanktonSD

190 posts in 1163 days


#7 posted 649 days ago

Commission would be based on several factors.
1. Is the person fulltime or partime
2. Is there a base pay?
3. How sellable is the product?
4. What kind of profit margin can you afford with the level of commission?
5. Quality of salesman..Ie better salesman demand more commission but also produce more sales.

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