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Old 02-16-2013, 06:26 PM
dpld dpld is offline
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most sales reps get 10% commission but in essence they get a weekly salary which is a draw off their commission of 10%.

depending on the size of your business and sales potential you would establish a territory and a realistic sales target number.

lets just say for example you hire a sales rep and give him a territory and you start him out on a salary of 30k.
he would have to bring in 300k in sales to break even on his salary and if he exceeds 300k in sales then he would recieve a additional 10% of what that amount would be.

so lets say he sold 375k for the year, he would already be getting a salary which is considered a draw for the first 300k and then he would get a additional 7,500.00 in salary.
the 7,500.00 would come as he sold each job and it was completed, billed and paid for as well as if the numbers worked out.

if he sold a job and it bombed he would not get any additional money.

when you hire a sales rep it is a very complex system that you have to follow in order to ensure he is getting paid properly and you are making money.
if he sold a 2,000 dollar job and the numbers did not jive he would not get a dime in commission.

there are a lot of things you have to establish first because you don't just give someone a commission just because he brought in a job.
the job has to make money.

depending on what you are doing and what he is selling you have to establish what the numbers are expected to be for him to see that commission.

if he sold a job and put 3 men on it and you for example need to bring in 50.00 per hour per man and the crew was on the job for 8 hrs that would work out to be 3 men x 8 hrs= 24 man hrs @ 50.00 per man hour the billable amount would be 1,200.00 plus materials and tax.

if he sold the job at say 1,000.00 and 3 men were there for 8hrs he would have a 200.00 loss for the day and he would get no additional commissions as well as would have a 200.00 negative balance on his yearly target of 300k.

you would not deduct it from his base salary because by law you can not do that but he would not receive any extra commission and at the end of the year he would not reach his target in sales.

a lot of people think you pay a sales rep a 10% commission regardless and it does not work that way and if that is how you did that you would go broke and he would just be throwing out crazy numbers just so he could get a sale and the whole process would back fire on you.

the key with having a sales rep is there has to be established ground rules and targets that he has to make. on top of that he will be responsible in not only finding the work and generating the sales by any means possible he will also be responsible for the billing, collections, supervising and directing the crews and bringing them to the job and showing the crew exactly what has to be done as well as ultimately be responsible in making sure the work is not only done to company standards but also to the customers standards.
he would also have to send out thank you's to the customers and anything else required to execute the job from start to finish.

having a sales rep can be a good thing and it is like having another owner on the job but the difference is unlike the owner, he see's nothing other then his salary if he does not execute flawlessly.
there are standard sales hiring practices available online but in order to have a sales rep you need to have every little detail spelled out and figured out.
if you are just gonna hire a sales rep because you don't want to do it and you don't have all the procedures in place it will end up being a big mistake for you and cost you a lot of money not only by way of paying a worthless salesman but also having a poorly run jobs and a very inefficiently ran operation that will also further cost you.
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