What commission % rate would you pay a salesperson?
Salesperson to sell marketing services through a commission only job. Base salary to be provided much later on.
Good Answers (7)
Joseph S.
Consultant at Comcast
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Depends on the industry. Consider the following:
1) What are the margins like in your industry? That limits the amount you can spend on Sales costs.
2) What is the sales process like? If there is a long sales cycle, needs for lots of sales support, and other things, you need to dedicate more of your Sales expenditures to things other than sales people's commissions.
3) Are your sales people "hunters" or "farmers?" If you want them to find new customers, you will want to make more of their compensation performance based and less salary-based. If you have an established customer base who need to be managed, you will want to your people to spend more time on relationships and os you will spend more on salary, expense accounts, and the like. If your sales force is large enough, you may want to have different plans for the new business/hunters and the relationship management/farmers.
4) What is standard practice in your industry? If you comp plan is too far from those of your competitors, either you won't be able to attract the best talent or you will likely be spending too much on Sales costs.
Please excuse that I was not able to give you a quick percentage. There are too many variables to do so, at least in this posting.
Frank A.
Senior management consultant/ programmamanager voor succesvolle begeleiding van complexe opdrachten in business en IT
if there is no basic salary or cost compensation paid for, the percentage should at least be between 10 and 20%. It is very much depending on the time you have to spend to gain business and ofcourse the turnover you can bring in. The higher the added valua of your work, the higher the percentage can be! Good luck. Frank
Simon K.
Stockholder and Associate Director of Assurance Services
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As an aside - from the Company's point of view commissions based on cash receipts is best, as this matches the cash outflow of the commission payment to the cash inflow from the sale, and also only provides commission on the true sales value received by the Company.
Next best is to base commission upon net sales - net sales should include a deduction for receivable balances considered doubtful, credit memos issued, discounts provided, etc. The makes sure that the Company does not pay comission on sales revenue that will never be collected.
These are obviously ideals, and the actual structure will be somewhat dependent on normal prevailing conditions in the industry/local marketplace.
Chris W.
17 years internet/new media experience.
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depends on a whole host of things - far too many for the 4000 words I have at my disposal here.
At the end of the day - if the sales are commission only based the commission should be high - if you get no sales you get no margin, profit or income so you are relying on these comm only guys.
Therefore you need to incentivise them with carrots and spare the stick - big juicy carrots too.
Actually good comm only sales people will only work for the high comms - try to get a sales guy or gal working for less than the going rate and you'll a)get no sales and b) get low level salesmen - in comms only sales it really is true what they say......
"You pay peanuts; you get monkeys"
Ron O.
President - Owens, Owens & Owens Consulting and Owner - Owens, Owens & Owens Consulting
Having been in sales for more than 25 years I agree with Mr. Schwartz below, there are too many variables to describe here. I will say one thing though is that if you want a true professional salesperson and do not want to offer a salary until later on I advise you offer draw vs. commission up front. It is hard to ask someone to work on straight commissions, possibly pay all there expenses to travel and then wait on the benefits of their work. At least the draw will compensate them in the short run until sales start to roll in. The positive for you is that if it is a recoverable draw then you get it back when the sales roll in out of the commissions before they are paid. The salesperson may prefer the draw situation because usually with a base salary situation the commission rate is much lower where in a draw situation it is higher. As far as the overall commission rate I would advise you study the competition as best as you can. The easiest way to find that out is to interview one and ask. That is what I did in the past before designing a comp plan. After I designed the plan the person liked it so much he joined the company.
More Answers (3)
10-20% of monthly sales.
Obviously it will depend on the market, price of the services or 'product' being sold. You will find that the standard for a commission only sales job in the marketing industry starts in the range of 20-30% of gross sales.
Once a base salary is implemented, depending on performance, 5-15% of gross sales on top of the base is widely used.
Zulkifly H.
Z-J'S
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i think i am deserves for 40 - 55% of the turn-oover sales and on top of that a good perfomance bonus.
