[webproducers] Re: sales commissions

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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