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Old 03-05-2009, 08:18 AM
 
Location: Sunny SC
4,080 posts, read 9,371,952 times
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Default Sales Rep. Commission

Has anyone here ever been an outside sales rep.? What is the usual percentage paid? If I'm not mistaken, it's usually based on sales not profit, correct? I have someone that wants me to sell their product (part time) locally and is offering commission based on gross profit, which doesn't make sense to me. How am I going to know what the gross profit is? They are alos offering a flat finders fee for qualified leads that lead to a sale. I think that doesn't make sense either. How am I going to know if it leads to a sale unless I complete the sale myself? I would rather do it this way, less involved but wouldn't I have to trust them a lot to be honest if a sale comes out of it eventually?

They never used a sales rep. before, so we are negotiating all of this. How does it usually work and what's fair? Opinions from people that have been an outside sales rep. are especially appreciated.
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Old 03-05-2009, 11:00 AM
 
8,169 posts, read 21,392,136 times
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Probably better off to post this thread in the Business section.

As an independent sales rep, I can only tell you ... at this point, with the information you've provided ... that you simply have to look closely at what work and sales level is expected to satisfy the folks you're working for.

Only you can determine if the expenses, time, and effort you'll have can be justified by the potential income ... so that your goals are met with adequate financial benefit to you.

As far as a "normal" sales commission, and how it's calculated ... there isn't any universal standard that applies across all sales work and industries.

Some folks in big ticket items work on a fraction of a percent of the selling price, some folks work on a nominal percentage (2%-9%), some folks work on 10%-15%, some work on 33%, some work on even higher percentages of the sales price. Some work for a portion or fixed fee per unit "sale".

If you want to know what's customary in your sales line ... then you'll need to ask other companies selling the same product through reps what they pay.

As far as knowing what's the "gross" on an item, this is where "trust" between you and the supplier is important. Essentially, they can tell you anything they want to. Unless they're going to open their books to you, you will never know a true cost ... and even an accountant might not be able to determine an accurate gross cost number for each item. What's important to you, in the final analysis ... is are you getting paid what you need to earn for the work and expenses your incurr?
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Old 03-05-2009, 11:52 AM
 
2,365 posts, read 7,711,728 times
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but wouldn't I have to trust them a lot to be honest if a sale comes out of it eventually?"

Well, life is about taking Risks. I would treat this opportunity as a business. Keep good records, all of your costs, including that extra coffee you bought while waiting for a client. Give it one month. If you make more money per hour than you are making now... then stick with it. If not, say well based on the revenue of one month, i cannot continue with this business. Also figure in, any initial start-up costs.

If you have to sign a year contract, then include a cancellation clause for any reason the first three months.

I worked as a mutual funds broker and if I made a cold call that was sucessful, I would send out a prospectus, and if they actually bought in, then I would know it, since that is how the company keeps the sales people competitive. Usually, when there is a sale, everyone finds about it.

But the othe situaiton, is where for example my teenage nephew worked for a cell phone retailer. They don't get a salary and work pure commission. This is a rip off for 95 percent of people, since there is always the exception to break the rule.

good luck
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Old 03-07-2009, 07:22 PM
 
448 posts, read 557,181 times
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Quote:
Originally Posted by Rapture View Post
Has anyone here ever been an outside sales rep.? What is the usual percentage paid? If I'm not mistaken, it's usually based on sales not profit, correct? I have someone that wants me to sell their product (part time) locally and is offering commission based on gross profit, which doesn't make sense to me. How am I going to know what the gross profit is? They are alos offering a flat finders fee for qualified leads that lead to a sale. I think that doesn't make sense either. How am I going to know if it leads to a sale unless I complete the sale myself? I would rather do it this way, less involved but wouldn't I have to trust them a lot to be honest if a sale comes out of it eventually?

They never used a sales rep. before, so we are negotiating all of this. How does it usually work and what's fair? Opinions from people that have been an outside sales rep. are especially appreciated.
I have been in sales in the automotive aftermarket for years. Pay plans do vary a lot, but here are a few pointers: Manufacturers rep: 7% of sales, you get a 1099 and pay all your own expenses and Social Security. Warehouse Distributor (WD) rep: draw, expenses, company car or vehicle expense, 2-3% of sales on most lines of merchandise, bonus for exceeding goals. Jobber sales: salary, company vehicle. Car sales: 20% of gross profit on new cars, cash spiff for finance contract, accessories, rustproofing, etc.
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Old 03-08-2009, 08:25 AM
 
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Very good and clear Post!!


"have been in sales in the automotive aftermarket for years"
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Old 03-08-2009, 11:49 AM
 
Location: Sunny SC
4,080 posts, read 9,371,952 times
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Thanks for all the info.
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Old 03-10-2009, 11:53 PM
 
Location: sowf jawja
1,912 posts, read 5,070,422 times
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i worked a sales job that paid a percentage of the total sales, but only after a certain amount of profit had been reached.

i had to make the company a set amount (profit varied on each product) before i received any commission.

so it certainly varies by company.
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Old 10-30-2009, 09:19 AM
 
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Can you tell me how all this ended up? What decision did you make? Based on what? I am facing the same situation now and would like some advice. Thank you.
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Old 04-28-2011, 05:12 PM
 
2,251 posts, read 2,676,227 times
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Depends on the industry, used to work in the printing and promotional products industry and there it is normal to pay on percentage of profit. Gives you the incentive to mark things up more. But you have to know what the cost to you is first. Typical split in printing/promo is 50% of profits. So if you buy something for $100 and sell it for $175 you get to keep $37.50 which works out to be about a 20% commission.

Also sold software and we got $300-$500 per sale and if we hit quota got paid $1000 per sale each month, so we had an incentive to hit our numbers each month. Plus after the first year you got residuals from people who kept paying the monthly fee for the software.
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Old 04-28-2011, 05:16 PM
 
624 posts, read 879,896 times
Reputation: 690
Digging up old threads today. Must be a slow news day.
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