# Commission rate/structure



## trekr (Jul 6, 2004)

What rate of commission do you think is fair for window/siding sales people-- assuming leads are provided? Do you pay on gross or net? Any thoughts are appreciated.

Sorry if this was discussed before-- couldn't locate it..


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## Paul Staub (Feb 21, 2005)

I get 8% then a monthly bonus plan up to 5 additional %. It is based only on net business. Of the 8% 50% is payed at time of sale and 50% is paid when the job is installed. bonus % is paid in one lump sum.

I have had 2 other job offers which were 10% on all net. Then 50% of any revenue that I overcharged the customer based on the "par" value of the window. For example if the "par" value was $5000 and it was sold for $7000 then the comission would be $1500. $500 for the $5000 and $1000 for the $2000 overage.


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## trekr (Jul 6, 2004)

Thanks for the info. If you don't mind-- how much is each sale worth to you (average over the last year or so) personally? I would have thought percentages on net profit would have been higher...


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## Grumpy (Oct 8, 2003)

I pay between 9% and 15%. Let me break it down for ya... and yes it was discussed before 
_
Base
Base commission 9% on all revenue which meet minimum price requirements as set by the management.

Monthly Sales Targets
• $0-$35k If your monthly total sales are below $35,000, then you will be paid the base commission.
• $36k-$45k If your sales are within the $36k-$45k range, then you will receive an additional 1% ontop of the base commission.
• $46k-$60k If your sales are within the $46k-$60k range, then you will receive an additional 2% ontop of the base commission.
• $61k-$80k If your sales are within the $61k-$80k range, then you will receive an additional 3% ontop of the base commission.
• $81k-$100k If your sales are within the $81k-$100k range, then you will receive an additional 4% ontop of the base commission.
• $101k+ If your sales exceed $101k, then you will receive an additional 5% ontop of the base commission.

You will receive commission based on all revenue for your jobs; however additional work such as replacement of rotted wood does not apply to your monthly sales targets.

Additional Sales Bonuses
Any lead that is self generated will carry a 1% bonus on top of the base commission. 

Payment Schedule
The sales rep will be paid upon completion of the job and when the final balance has been collected. Commission checks will be paid out twice monthly. _

This is copied and pasted right out of my Corporate Manual.


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## trekr (Jul 6, 2004)

Thanks Grumpy. May I ask why you decided to pay on revenue rather than profit? I kinda like the idea of some sort of split on profit, but your way is more straight forward.


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## Grumpy (Oct 8, 2003)

I used to be paid on profit but I was a project manager not just a salesman. 

If the salesman sells at my price then I'll make plenty of money to cover them, besides profit can be disputed revenue can not. Also most major sales orginizations are revenue based commissions not profit based commissions. The commission is already built into the markup structure. To be brutally honest I mimicked Home Depot's At Home Services commission structure because I know a few of the guys form home depot and I was hoping to steal 'em for myself. I pay 1% better than home depot does. These guys are highly trained closers! 1% is a huge difference. 

I inspect all jobs before I cash the deposite check. If the salesman F* up the price he has to go abck and resell the job or it's cancelled.


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## Mike Finley (Apr 28, 2004)

Could you spell out your commission structure a bit clearer? :cheesygri 

From my experience, a system set-up to paying off the gross is way easier to manage than one paid off profit. Lots less book keeping involved. You almost always see a system based off gross where the product has a fixed mark-up. Since the same product always sells for the same dollar amount there isn't really any incentive for the salesperson to work profit in the deal, he is inclined to sell more of the product and not worry much about specific products that may or may not be more profitable.

Systems set up to pay on the net are usually centered on products that don't have fixed mark-ups and have more creativity in the selling. These systems can be harder to manage not just because of the book keeping involved, but also because they attract creative sales people who quickly learn to sell what puts the most money in their pockets. A manager has to stay on top of the sales force because there is a fine line between selling the customer what he wants and what the salesperson wants to sell, however when you get the right combination of creative and ethical salesperson the sky is the limit on profit for the company in this type of system.

Grumpy - how come you only pay on the sold job and not the entire job? That's good for your company if you can get it, but if you were looking to hire me I would be heavily negotiating being paid on the entire job. Especially if as a salesperson I had to supervise the job from start to finish. Is the last touch the salesperson has with the customer when they sign the contract or do you have them involved from start to finish?


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## Grumpy (Oct 8, 2003)

Mike,

I do pay on the entire job, any extras are added to the final commission payout, but the actual sale price is what determines the commission tier. Let's say you were my salesman and you sold a $5,000 job last month and your total was $47 k. That would put you with in the 11% commission tier. You would receive 11% on that $5,000 and any extras added to the job.

The sales person doesn't supervise from start to finish, that would be a project manager IMO. The sales person DOES need to show his face when the work is being done, not to supervise but just to communicate with the customer. Also the sales person needs to show up when the job is complete not to inspect but to make to answer any questions the customer has before we ask for money. After the questions are answered the sales person asks for the money.

I have all my estimation forms setup in such a way that they can be handed to me and I can pick up the job running where the salesman left me. 

I want my sales people selling. I do have the structure set up to give the customer the illusion that they are managing hence the repeat visits. But in reality I manage all production. The sales person might spend a maximum of 3 additional hours on the job after it's sold.

At my last job I managed from start to finish which was a huge selling point for me, but I was also paid based on profit so it was always in my better interest to make sure the job went according to plan and make sure the job came in on budget. I believe to pay someone based on profit this person really needs a very strong graps on the products and services they are selling and hands on experience is almost a MUST in our industry to be paid on profit.

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I am very generous when it comes to paying the people I work with (subs and employees), but I am also very demanding. I pay well for those who deserve it and those who don't deserve it go bye bye.


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## Paul Staub (Feb 21, 2005)

> Thanks for the info. If you don't mind-- how much is each sale worth to you (average over the last year or so) personally? I would have thought percentages on net profit would have been higher...


Average order value was about $6100


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