Sales Person on Commission... What Salary?
Discussion
Morning All and welcome to Monday, I hope you enjoy your stay...
Been thinking over the weekend that I need to expand and have a greater sales force, as at the moment the sales person is me and it's not my forte.
The trouble being, that like most small businesses, I haven't got a massive wad of cash to put towards wages which leads me down the route of commission based sales etc.
The question being, what would be considered as a 'fair' salary for someone on commission?
I'm thinking 20% commission per job, which is likely to be around £250 per sale. The opportunities for sales are definitely there - I would estimate 4-5 sales a month to begin with?
Cheers
Been thinking over the weekend that I need to expand and have a greater sales force, as at the moment the sales person is me and it's not my forte.
The trouble being, that like most small businesses, I haven't got a massive wad of cash to put towards wages which leads me down the route of commission based sales etc.
The question being, what would be considered as a 'fair' salary for someone on commission?
I'm thinking 20% commission per job, which is likely to be around £250 per sale. The opportunities for sales are definitely there - I would estimate 4-5 sales a month to begin with?
Cheers
So £15,000 a year. That's not going to be particularly attractive, in fact attractive at all to a good salesman. To be honest, there should be potential to make more sales than that...I'd have hoped.
5 a month every year is a turnover of £75k. Subtract his 20% leaves you with £60k. Is that enough to cover all your outgoings and for you to make a reasonable living?
5 a month every year is a turnover of £75k. Subtract his 20% leaves you with £60k. Is that enough to cover all your outgoings and for you to make a reasonable living?
20% per sale seems high, how big is your margin?
It depends what field you're in. The idea that salesmen earn £1000's is a myth in most industries. £15-18k basic plus commission which earns £22-30k if it's not a particularly technical sales position is usually enough to attract someone. Plus if they can do 4 or 5 sales per month you need to to target them at 10 to earn maximum bonus levels.
Edit, re-read your initial post you're offering commission only....20% of sales price still seems high, don't forget every penny you're giving away off the top line is profit not turnover. If your margin is 40% can afford to give half of it away? Are there better sales opportunities elsewhere? Especially at such a low volume.
It depends what field you're in. The idea that salesmen earn £1000's is a myth in most industries. £15-18k basic plus commission which earns £22-30k if it's not a particularly technical sales position is usually enough to attract someone. Plus if they can do 4 or 5 sales per month you need to to target them at 10 to earn maximum bonus levels.
Edit, re-read your initial post you're offering commission only....20% of sales price still seems high, don't forget every penny you're giving away off the top line is profit not turnover. If your margin is 40% can afford to give half of it away? Are there better sales opportunities elsewhere? Especially at such a low volume.
Edited by 897sma on Monday 14th April 08:36
Sorry the initial post is not meant to read as commission only, it is meant to read as what Salary to accompany a 20% Commission.
I offer production services so my profit margin is very good as my overheads are very low.
I'm hoping that with a decent commission available I would encourage people to work for a lower basic rate. Does that seem plausible?
I offer production services so my profit margin is very good as my overheads are very low.
I'm hoping that with a decent commission available I would encourage people to work for a lower basic rate. Does that seem plausible?
Certainly possible, it really depends on what type of candidate you need.
If what they're selling is a simple concept that essentially just needs presenting well and you generally sell there and then on the spot, then you can 'get away' with paying less. However as mentioned above, if it's a more technical sale that maybe takes 2 or 3 meetings and some hand holding and project management then you'll need to pay an appropriate salary.
I would suggest paying a percentage of profit (if that was your consideration) as opposed to revenue.
Also, set realistic targets. Nothing turns off a salesperson more than an unachievable OTE.
If what they're selling is a simple concept that essentially just needs presenting well and you generally sell there and then on the spot, then you can 'get away' with paying less. However as mentioned above, if it's a more technical sale that maybe takes 2 or 3 meetings and some hand holding and project management then you'll need to pay an appropriate salary.
I would suggest paying a percentage of profit (if that was your consideration) as opposed to revenue.
Also, set realistic targets. Nothing turns off a salesperson more than an unachievable OTE.
H18 ENF said:
Sorry the initial post is not meant to read as commission only, it is meant to read as what Salary to accompany a 20% Commission.
I offer production services so my profit margin is very good as my overheads are very low.
I'm hoping that with a decent commission available I would encourage people to work for a lower basic rate. Does that seem plausible?
Yes if sold in the right way to the right person, if they are confident in selling your service why not go for a £12k basic and limited commission with the option to change to no basic and open ended commission at a later date? I offer production services so my profit margin is very good as my overheads are very low.
I'm hoping that with a decent commission available I would encourage people to work for a lower basic rate. Does that seem plausible?
I think there's too many variables to offer a figure..
some sales people will work for 20k, others 200k!? What are you selling, how long does it take to sell? how is it sold? is traveling necessary? would a car be provided if so? if over phone is working from home an option/preferred? what hours/days are expected?
in terms of figures - whats the absolute maximum one person could sell? you might not actually know this! If someone started selling 20 units per month would you still be offering around £250 on the basis they've brought in this revenue or would you cut the commission?
with a bit more insight it'd be a lot easier to work out. Can you find sales jobs in your field through an agency/on a jobsite? there may be guide figures there for you to work from.
some sales people will work for 20k, others 200k!? What are you selling, how long does it take to sell? how is it sold? is traveling necessary? would a car be provided if so? if over phone is working from home an option/preferred? what hours/days are expected?
in terms of figures - whats the absolute maximum one person could sell? you might not actually know this! If someone started selling 20 units per month would you still be offering around £250 on the basis they've brought in this revenue or would you cut the commission?
with a bit more insight it'd be a lot easier to work out. Can you find sales jobs in your field through an agency/on a jobsite? there may be guide figures there for you to work from.
If it is a simple sale, or if you have all the technical knowledge and you just don't want to do the phone bashing yourself, would outsourcing work? I employ a small company that charges less than £20 per hour to phone people on my behalf and qualify leads. This means that my guy only talks to the 10% of people who are interested and not the 90% who are not. That's twelve and half hours of calling on your behalf for the price of the value of one job. They could probably call well over 100 people in that time. How many hot leads would that produce that you could close yourself?
Another method I have used fairly successfully is to 'employ' people via an agency. You can get them in on a very flexible basis, send them home at lunchtime if they are rubbish, tell them whether you want them the next day at the close of play, only pay the agency for the hours you use. Works well with campaigns.
Another method I have used fairly successfully is to 'employ' people via an agency. You can get them in on a very flexible basis, send them home at lunchtime if they are rubbish, tell them whether you want them the next day at the close of play, only pay the agency for the hours you use. Works well with campaigns.
Sales is an area which pays well but non salesmen don't seem to agree.
Sales is tough, demanding and can wear you down. As you've seen its not your forte.
The potential to earn £15k is just too little, you could work in a chip shop and earn that!
There has to be meat on the bone, an incentive to get out there, work long hours and sell. Many salesman should be able to earn over £40k.
Sales is tough, demanding and can wear you down. As you've seen its not your forte.
The potential to earn £15k is just too little, you could work in a chip shop and earn that!
There has to be meat on the bone, an incentive to get out there, work long hours and sell. Many salesman should be able to earn over £40k.
Sales is an area which pays well but non salesmen don't seem to agree.
Sales is tough, demanding and can wear you down. As you've seen its not your forte.
The potential to earn £15k is just too little, you could work in a chip shop and earn that!
There has to be meat on the bone, an incentive to get out there, work long hours and sell. Many salesman should be able to earn over £40k.
Sales is tough, demanding and can wear you down. As you've seen its not your forte.
The potential to earn £15k is just too little, you could work in a chip shop and earn that!
There has to be meat on the bone, an incentive to get out there, work long hours and sell. Many salesman should be able to earn over £40k.
jonah35 said:
Sales is an area which pays well but non salesmen don't seem to agree.
Sales is tough, demanding and can wear you down. As you've seen its not your forte.
The potential to earn £15k is just too little, you could work in a chip shop and earn that!
There has to be meat on the bone, an incentive to get out there, work long hours and sell. Many salesman should be able to earn over £40k.
Which is why, as I clarified in an earlier post, I'm looking for what the basic salary should be to accompany the commission... Sales is tough, demanding and can wear you down. As you've seen its not your forte.
The potential to earn £15k is just too little, you could work in a chip shop and earn that!
There has to be meat on the bone, an incentive to get out there, work long hours and sell. Many salesman should be able to earn over £40k.
Perhaps I should be more specific with what the sales person may be selling.
I have 2 Holographic projection products.
Both rent out between £200 & £100 per day.
Average rental is 3 - 5 Days.
On top of the rental price is the video production cost - This can be anything be anything from £800 - £3,500.
These products are also available to purchase - at approximately £4,500. Clients also request bespoke variations of the products that can be upwards of £15,000.
In addition to this I also provide standalone video production services. In the past these have been between £500 and £45,000, with the average being about £7,000
I would be looking at the commission being based on profit, but as I own the majority of the kit and the video production is mainly done in house those figures are fairly similar.
The sales person would be required to have a knowledge of the market but more importantly would need to be an excellent 'people person' as I want to be able to grow relationships with clients rather than just make a quick sale.
Hope this helps.
H18 ENF said:
jonah35 said:
Sales is an area which pays well but non salesmen don't seem to agree.
Sales is tough, demanding and can wear you down. As you've seen its not your forte.
The potential to earn £15k is just too little, you could work in a chip shop and earn that!
There has to be meat on the bone, an incentive to get out there, work long hours and sell. Many salesman should be able to earn over £40k.
Which is why, as I clarified in an earlier post, I'm looking for what the basic salary should be to accompany the commission... Sales is tough, demanding and can wear you down. As you've seen its not your forte.
The potential to earn £15k is just too little, you could work in a chip shop and earn that!
There has to be meat on the bone, an incentive to get out there, work long hours and sell. Many salesman should be able to earn over £40k.
Perhaps I should be more specific with what the sales person may be selling.
I have 2 Holographic projection products.
Both rent out between £200 & £100 per day.
Average rental is 3 - 5 Days.
On top of the rental price is the video production cost - This can be anything be anything from £800 - £3,500.
These products are also available to purchase - at approximately £4,500. Clients also request bespoke variations of the products that can be upwards of £15,000.
In addition to this I also provide standalone video production services. In the past these have been between £500 and £45,000, with the average being about £7,000
I would be looking at the commission being based on profit, but as I own the majority of the kit and the video production is mainly done in house those figures are fairly similar.
The sales person would be required to have a knowledge of the market but more importantly would need to be an excellent 'people person' as I want to be able to grow relationships with clients rather than just make a quick sale.
Hope this helps.
£16-20k basic plus company car plus commission on every sale I reckon.
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