FreeLists / webproducers / [webproducers] Re: sales commissions

["C L" <cl888@xxxxxxxxxxx>]

I was perusing through this topic and thought that the percentages seem to 
be extraordinarily high.  I haven't done much of this referral sales 
percentage stuff, but who exactly is paying for these 20-30% commissions?  
The client or are you as the proprietor eating the cost?  I remember the 
norm during boom times were 10-15% or cost, which were handsome indeed for 
six to seven figure projects.  Are these 20-30% commissions also for six to 
seven figure projects (are there any more seven figure projects?) or for 
projects that cost a few thousand?  With these kinds of commissions, what 
are the markups?  If you markup 30% and pay 30% commission, and the project 
comes in EXACTLY as planned, then how are you/we supposed to pay rent and 
bills?  And if we markup 50% to make a 20% profit, isn't that an overly 
bloated budget that's likely to scare the client away (not to mention we'll 
easily get outbid)?

In the past, for the few times that I actually paid out to sales guys, the 
commission was 8-12%.  My normal markups were 20-25%.  These days, I haven't 
dealt with sales guys since I have no money to hire them, and I barely make 
any markups at all (whatever I profit is actual work I do on the project, 
minus any preliminary meetings, etc.).  Am I just beating myself to a pulp 
or is this the kind of norm that we're going through in this market?

My two cents and curiousities.  I'd appreciate any comments...

.chang


>From: "Katherine Gray" <kat@xxxxxxxxxxxxxxxxxxxx>
>Reply-To: webproducers@xxxxxxxxxxxxx
>To: <webproducers@xxxxxxxxxxxxx>
>Subject: [webproducers] Re: sales commissions
>Date: Fri, 23 May 2003 09:17:31 -0700
>
>On this subject, throwing this out to the group: what is the markup on 
>services in your area? We markup 30% and are happy if we come out at 20% 
>profit. Currently we don't offer sales commissions (I'm the main sales 
>person but I'm also the CEO) but in the past I've offered 20% on the 
>original budget, which was too much considering our margins. I'm going to 
>hire an AE in the next few months and need to work out the base 
>pay/commission structure.
>
>
>
>
>
>
>----- Original Message -----
>   From: Laura Allen
>   To: webproducers@xxxxxxxxxxxxx
>   Sent: Friday, May 23, 2003 8:54 AM
>   Subject: [webproducers] Re: sales commissions
>
>
>
>   Because it's such a rough market, I offer people between 25-30% for
>   referrals on business.  I don't know what your business is or what your
>   mark-up is, but this seems extremely reasonable to me. Just to be clear, 
>he
>   would be getting 5% to manage the agents correct?  That means the new 
>agents
>   would get 10% for closing the deal and he would get 5% for managing 
>them.
>   You probably can't afford to pay them 10% for sales and him 15% for 
>managing
>   them, so I just wanted to throw that out there.  Also, you need to make 
>it
>   clear who is running these new accounts after they are closed.
>
>
>   ----- Original Message -----
>   From: "Stuart Hunt" <stuarth@xxxxxxxxxxxxx>
>   To: <webproducers@xxxxxxxxxxxxx>
>   Sent: Friday, May 23, 2003 11:44 AM
>   Subject: [webproducers] Re: sales commissions
>
>
>   >
>   > Hi, there,
>   >
>   > We're paying our marketing/sales guy a 10% commission on project 
>sales,
>   and
>   > for additions/updates too.
>   >
>   > He's proposing getting other agents to make sales at the same rate and
>   then
>   > adding a 5% on top for managing these agents.
>   >
>   > I was wondering if other's have alternative sales commission schemes 
>and
>   if
>   > they like them?
>   >
>   > Thanks.
>   >
>   >
>   > --Stuart Hunt
>   >
>   >
>   >
>   > 
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