FreeLists / webproducers / [webproducers] Re: sales commissions

[Stuart Hunt <stuarth@xxxxxxxxxxxxx>]

I've been thinking about this a bit more, and it's becoming apparent that
the 10% might not be enough to keep them interested for smaller projects,
and they'd need to get us more projects than we're geared up for in order to
make a decent income -- so I was thinking of making it 20% and adding a few
client relationship and interface tasks too.  Not quite sure yet.  Thanks
for the feedback so far.

--Stuart

On 5/23/03 3:00 PM, "Katherine Gray" <kat@xxxxxxxxxxxxxxxxxxxx> wrote:

> This is exactly why I'm bringing this up. I could never offer 20% again (that
> was without any base at all, on the original budget which ended up growing by
> the end, and it was a one-time deal), but if my true profit is really only
> about 20% even 10% commission is a little scary. We just raised our rates a
> little to cover new overhead (bigger space, a few more employees and
> well-deserved raises), but it wasn't as much as it needed to be, only what I
> figure the market here could bear.
> 
> The other thing I'm trying to balance is capacity. If we get a good sales
> person who gets a modest base and a healthy commission, which is what I'm
> leaning towards, how do I keep the schedule from getting overloaded but still
> keep that person happy enough to keep selling? I know there are no easy
> answers to these questions, but I'm interested to know what other people's
> thoughts are.
> 
> -Katherine
> ----- Original Message -----
> From: C L 
> To: webproducers@xxxxxxxxxxxxx
> Sent: Friday, May 23, 2003 10:56 AM
> Subject: [webproducers] Re: sales commissions
> 
> 
> 
> 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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>> 
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