# Sales Commissions



## MEL (Apr 7, 2007)

What is a typical commission for a residential roofing salesperson? Do they typically get compensated for bringing in their own leads?


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## bobopsmidmo (Dec 20, 2010)

It depends on the type of lead that we have. If I give the rep the lead then they get 3% of the total bill but if they "self Generate" the lead then we pay them 5%. We also bonuse the guys out if they hit there numbers every week. I also have one guy going to commerical properties all he does is introduce the company get a list of properties then I have another guy come in behind him and messure the jobs. He gets paid 2% but does less work.


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## larryb (May 23, 2008)

*Sales commissions*

Mel,

I believe that a sliding scale is best. If the rep is new and has a good provable resume, I'd start em' out with a cover your expenses draw verses commission at 5% then increasing to 10% of profit after a 10% overhead cost is subtracted if he or she proves him/herself. If the rep is a good "farmer" and finds and sells their own leads I'd increase the % to 15 or more. carrot and stick...

There are a lot of variables to consider. Does the sales rep have any installation experience? If so, they'll know how all the parts fit together and should have a better understanding of how to upgrade a job which should bring in additional profit. Is the sales rep knowledgeable of the production process? That, too, will help the rep bring in more, better and more profitable business and will help you to avoid alot of headaches.

One experienced well paid (straight commission) sales pro will make you more money than five inexperienced estimators.


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## buildpinnacle (Sep 2, 2008)

Here are some standards from several peers of mine in the biz:

% of gross profit -- 25-35% of profits after material and labor deducted

% of net -- 35 to 50% after a front office fee of anywhere 5-15%, labor, materials deducted.

straight % of contract 7-10%

Some pay X % for company supplied lead and X % for salesman supplied lead.

I pay 10% of contract. Contract has to be based on our minimum price sheet. Every single job is pre-capped to try to catch a potential mistake. The phrase 'this contract is subject to management approval' is on every contract. I don't like the salesmen to be privy to company margins so they get their 10% and don't worry about how much we made. We also don't spend alot of time figuring commissions. You bring in a $50,000 check, you walk out with a $5000 check. It's very easy.


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## Framer53 (Feb 23, 2008)

bobopsmidmo said:


> It depends on the type of lead that we have. If I give the rep the lead then they get 3% of the total bill but if they "self Generate" the lead then we pay them 5%. We also bonuse the guys out if they hit there numbers every week. I also have one guy going to commerical properties all he does is introduce the company get a list of properties then I have another guy come in behind him and messure the jobs. He gets paid 2% but does less work.


You can find sales people to work at those numbers?

Granted it has been 30 years since I worked as a sales rep for roofing and siding company, but i would not consider anything less than 10% of the gross and another 5% for leads as adequate compensation.

Remember, if you pay well, it is easier to hire good people...

One other thing, there has to be a minimum, to be paid at those rates, and it slides downhill the less you sell a job at. Also, it works the other way also. The more over the company target or PAR, the more percentage a salesman should make.:thumbsup:


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## MEL (Apr 7, 2007)

I’m getting ready to shut down my company and going to work for someone else but I’m not sure if anyone around here can afford to pay me a 10% sales commission plus 5% for generating my own leads. I’m not sure how many companies around here can even sell at a 20% gross profit margin.

There are a lot of roofers in the Detroit area that are charging a flat rate of $300 for gross profit. If the job has $6000 worth of labor and material they add on $300 for gross profit and charge $6300 to do the job. Or if the job has $8000 worth of labor and material they charge $8300 for the job.

The market here is flooded with cheap roofers. They are laid off carpenters or laid off auto workers. They are collecting unemployment and food stamps and doing roofing on the side. Demand is down and homeowners are looking for a cheap way to get their roof done. 

There are very few legitimate contractors that can make a living in the roofing business around here. That’s why I am getting forced out of the business. It isn’t worth it anymore to have the responsibility of owning the company.

I’m thinking about going to work for a marketing company as a salesperson and I could still sell roofing on the side. I wouldn’t have to deal with the headaches of managing the company.

I could generate my own leads from referrals and I have a mailing list of about 3000 houses that have old roofs.

There a few contractors around here that have a good reputation and sell at higher prices. There are not very many that I would even consider working for.

We hardly ever have jobs that are paid for by insurance companies in Michigan because we don’t get storm damage here very often. What I’m talking about is selling to homeowners that have to come up with the money on their own.

Let me know if you have any ideas or feedback.


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## Tech Dawg (Dec 13, 2010)

Is there any kind of "specialty" that you can branch into and generate new business from old customers/leads...?


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## bconley (Mar 8, 2009)

> I’m getting ready to shut down my company and going to work for someone else but I’m not sure if anyone around here can afford to pay me a 10% sales commission plus 5% for generating my own leads.* I’m not sure how many companies around here can even sell at a 20% gross profit margin.*


Wouldn't that be what they would hire you to do if you were the salesman? to get paid it would be you selling the job for the needed GM to get your pay.
If you can't do that for yourself why would it be different for another company?
Not trying to be harsh but maybe roofing in Detroit is not the game to be in at all, at least for right now.


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## MEL (Apr 7, 2007)

bconley said:


> Wouldn't that be what they would hire you to do if you were the salesman? to get paid it would be you selling the job for the needed GM to get your pay.
> If you can't do that for yourself why would it be different for another company?
> Not trying to be harsh but maybe roofing in Detroit is not the game to be in at all, at least for right now.


Yes it is what they would be paying me to do, but if they are not already selling at that margin before I arrive how would I be able to make it happen? I'm not sure if there is enough money in it for me and the owner of the company.

Yes I am doing that for myself but there aren’t enough people out there that want to buy. Yes roofing in Detroit is not a good business to be in, that’s why I want to get into something else. But why waste referrals or other leads that might come in. I could work 2 jobs because appointments with homeowners are in the evening anyway.


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## MEL (Apr 7, 2007)

Enola Eagle said:


> Is there any kind of "specialty" that you can branch into and generate new business from old customers/leads...?


Yes there are things I cold branch into like decks, painting or brick pavers.


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## Framer53 (Feb 23, 2008)

Roofing is a funny business. Locally we have a great number of roofers that don't charge what they should. But we have a number that do. These roofers tend to be busy, and sell the quality and satisfaction of having the roof done right.

# years ago, I hired a company to do my roof. I would not go with the low bidder because I am not satisfied that they would be around if complications arose latter.

You needed to find those customers as I bet that Detroit has similar customers as my smaller city does.

These customers in my experience tend to be middle class people that are looking for a fair price and good value, not the low ball experts. Marketing to them would have turned around your attitude.

That said, I am sorry that you have decided to close shop. I would look at the biggest roofing company and go ask for a job selling for them I bet they pay their salesmen commission similar to what I told in earlier posts.


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## MEL (Apr 7, 2007)

Framer53 said:


> Roofing is a funny business. Locally we have a great number of roofers that don't charge what they should. But we have a number that do. These roofers tend to be busy, and sell the quality and satisfaction of having the roof done right.
> 
> # years ago, I hired a company to do my roof. I would not go with the low bidder because I am not satisfied that they would be around if complications arose latter.
> 
> ...


Some other issues that relate to this are; the number of people doing roofing in this market has probably doubled over the past 2 years from around 3000 to 6000 so-called roofing contractors and most of them are being subsidized by our socialist government so they don’t have to charge normal prices. They live off of unemployment, food stamps and their wifes paycheck.

Then there are other companies that have been around a long time but find a way to charge cheap prices, they are trying to compete with the fly-by-nights by only charging $300 gross profit.

I have kept my price high enough to cover overhead and make a profit and I can still close sales. I just can't generate enough leads to keep going.


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## Slyfox (Dec 22, 2007)

Every/All home owners are looking for the best price, sometimes that equates into the lowest price, sometimes not.
Example: My wife and I just purchased a new stove, we looked for and found the best price for us. It was not the cheapest in the store or the most expensive, it was just the best priced one that best fit our needs.

Do you offer choices in your service?
I don't mean lower your prices, or purposely cheat on materials, procedures or other issues such as taxes & insurances, but offer real choices.

1. Good quality roofing system.
2. Better quality roofing system.
3. Best quality roofing system.

(When my Wife & I purchased our stove, we got the Better Option.)

Fly-bi-nites.
You can't compete with the hacks, they cheat on everything/anything so just don't acknowledge them at all, not during your sales prep or sales pitch.

Week end warriors.
You can some what compete with the people by offering a basic roofing system with a basic warranty.
You're price will still be higher than the week end warriors, but it will be in the same ball park and people will pay a little more if they know their getting a better service.

Newbies.
You can compete with their low ball prices the same way as with the week end warriors example above and actually have fairly good success doing so if you keep your sells pitches clean & positive.


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## MEL (Apr 7, 2007)

If you had 10% of the sales price as a marketing budget would you be willing to pay a sales person that much for bringing in their own leads in addition to their regular sales commission that they would get for closing the deal?


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## FerrisHI (Oct 20, 2010)

MEL said:


> Some other issues that relate to this are; the number of people doing roofing in this market has probably doubled over the past 2 years from around 3000 to 6000 so-called roofing contractors and most of them are being subsidized by our socialist government so they don’t have to charge normal prices. They live off of unemployment, food stamps and their wifes paycheck.
> 
> Then there are other companies that have been around a long time but find a way to charge cheap prices, they are trying to compete with the fly-by-nights by only charging $300 gross profit.
> 
> I have kept my price high enough to cover overhead and make a profit and I can still close sales. I just can't generate enough leads to keep going.




This is a marketing issue...You should turn to the Lead Generators to help you out...Plenty of contractors dont like the lead generators but the better salesman will do just fine...leads from them are not as good as call ins or website hits but none the less i have always made money from them...


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## buildpinnacle (Sep 2, 2008)

Mel:

a 10% advertising budget is pretty high unless you are doing storm work.....then it's still pretty high. Usually between 3-5% is more than sufficient. I expect $1M from each salesman. I don't care how they get it.....2 $500k jobs, 4 $250k jobs, 20 $50k jobs. If my advertising budget is 5%, I am allowed $50,000 per million to support each salesman with leads. Do you know how much advertising you could do with that kind of money for each salesman? Now, for every sale my salesmen get, we generate anywhere from 5-8 referral sales. I perfected this system as a 6 figure salesman years ago in this biz and have trained all my guys to use it. Now, after over a decade in all of our market areas, anytime a storm hits, we have all of our clients established and we start working referrals, neighboring businesses, etc. I pay a $500 draw for 5 weeks. That's it. If they don't have something going by then, I don't need them. If they have a few jobs they are in the middle of and we're working a claim and we have an assignment on them.....I'll extend that out based on paper earnings. You will find that every single salesman you interview will swear his children's life about how much he'll sell. The majority will quit or get fired. A truly good roof salesman....a closer.....a 2 percenter, is worth their weight in gold. 

Your frustrations are understandable. However, this is not a quick fix. For now, go out and comb. You won't make any money waiting on the phone to ring. Go door to door to every business in town. Walk through the buildings to see if there are stained ceiling tiles. Go to the manager or owners and ask them if they have any roof leaks. Tell them to give you their hardest leak and if you can't stop it, you won't bill them. Earn their business. Go out there and revisit why you got in this business in the first place. It will be a refresher and you may stumble onto a monster by looking for a billable repair.


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