I actually disagree. I prefer to pay commission off of gross profit margin vs gross sales. Paying by gross sales allows a rep to price “skinny” to get the sale but the company is left with less gross profit. Everyone’s preference is different but that has worked best for me is past businesses.
125 calls is a lot of calls
Our sales rep is paid 100% commission. He only does it part time at the moment. We also give him a $10 bonus for every 5 star review that we receive. He gets paid residual on commercial accounts that are month/b-monthly,etc… Some months he doesn’t even work and he is still getting his percentage for landing the commercial account cleaning.
I’ve been in sales practically all my adult life and 125 calls a day is impossible. Especially with all those other duties. In a residential door knocking environment it would mean 6.25 hours a day of door knocking alone.
This is the best advice in this whole discussion, in my opinion. The owner should be the main salesman.
We have a rather large electrical contractor business here that was started by a guy who was the head salesman/GM of another electrical contractor outfit for 20 years. When he decided to go out on his own, he took more than half his former company’s customers because he had the relationship s instead of that owner.
Not related to this industry, however, 100 calls per day is what our call center operates on and that is tough for some. We are talking about a computer dialed, head set wearing, high performance set up.
Top performers typically are UNDER the 100 goal because they talk to a few folks.
Sales experience here, always went for the high return myself. We had a very minimal pay of 600 a month, the rest was commission or bonus. Averages about 55k a year back in the 90s when that was good coin. Note the 600 covered minimum wage back then.
I know my business is printing and marketing and not pressure washing, but sales is sales.
I’ve hired many sales reps over the years. I’ve experimented with various compensation models. Based on the lessons I’ve learned, I’ll never hire anyone other than a 100% commission rep. As an owner, if I don’t produce then I don’t eat. I expect the same from my reps.
It takes a special kind of person to gamble their livelihood on their performance. Those who do have the hunger and motivation to make the best salespeople. Without exception, every heavy hitter I’ve encountered in my 20 years in printing have been 100% commission.
Most companies in my industry offer a draw plus a sliding commission scale based on profit. Generally 5-10% commissions. My reps make more than double that rate. If I’m going to be selfish with salary, it’s only right that I’m generous with commissions. And there’s nothing I love more than signing a big commission check. They more they make, the more I make.
Regarding paying on sell amount vs margin amount: I’ve experimented with that as well. Here’s what I’ve found works best for me. My reps have a bottom line price. Included in that price is 10% commission. Any dollar amount they can sell the job for above that bottom line price, we split 60/40. I get the 60.
For example, if the baseline is $1000 and they sell it for $1500, they make $300. $100 from the 10% of the baseline, and $200 from the 40% of the overage. This motivates them to not leave money on the table. If they need to go below the baseline, they have to clear it with me and it generally involves an agreeable split of the amount below the baseline. I’ll cover some of it, some will come out of the commission.
That’s all I can think of at the moment. Feel free to ask any questions if anything was unclear. Best of luck.