Sales Commission

Nathan

For those of you who are paid on commission... how is your compensation set up? Do you have a base salary with commission added onto it or are you 100% commission?


What percentage of your income is a base salary?
What is your commission on a sale?
Last, if you could implement any system… what would it be?

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Nathan

"He is no fool who gives what he cannot keep to gain that which he cannot lose." - Jim Elliot

Floorwizard

100% commission.

depending on the total margin the job comes to, I can make 7% of the total sale.
Plus bonuses when I sell certain amounts.
Plus spiffs if I sell certain products.
Agood salesperson with some builders on the side can easily make 6 figs

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"in 20 years you will regret more what you did not do than what you did"

Grumpy

Well I make 25% of the profit off each job but I have a unique structure. I also make $300 a week salary. Most guys get 10% commission with a draw system. This way no matter what they are getting a few bucks even when it's slow. The draw is deducted from future commissions so in the ned everything is even.

To my suprise, I found out when my boss bids jobs he doesnt figure in a sales commission in his jobs. I asked him why and he said because he makes a little bit no matter if I sell or he sells, but I told him it's obvious you can get more because I do it every day... Oh well.

Teetorbilt

Nathan, your last question is worth a million dollars if anyone had a definitive answer. Over the last 30 yrs. I think that I have tried them all.
With older employees with the old work ethic (quality comes first) a flat rate + comission works fine.
Most new hires today view $ per hr. as a sign of their worth. Benefits only mean something if they have a family. Company loyalty is passe for most.
I tell new hires that I will pay them what I feel that they are worth and I pay well. I take them to selected homes and ask if they can duplicate the work and how long they estimate it would take them to do it. I then pitch an offer based on their responses and personal attitude.
Raises are based on a gut feeling, sometimes you can just spot an asset and they get a raise in 2 wks. Some people start off like a ball of fire and then fizzle out, I can generally spot them too, after the first week.
General labor, I usually get from other sources. LaborFinders here. You get them when you need them and as you need them. The company takes care of the taxes, workers comp, etc.
My key to sucess is to keep a talented and versitile core group. Teamwork cannot be expressed enough, a drywaller should be able to stop what he is doing long enough to help an electrictian pull a wire.
Attitude is everything! I walk through a jobsite like a cheerleader, positive, positive, positive! Congratulate everyone! Tell them what a great job they are doing. For negatives, I'll call a guy over into a neutral corner, out of earshot of anyone else and explain where improvement is needed. NEVER criticize anybody in front of their workmates. e.g. Bob! I've got a change order! Bob comes over and everbody else goes about their business. Unroll blueprints, point finger and say "Bob, did you notice that the crown moulding in the dining room isn't straight?" Bob says 'I'll see to it' and the subject is over. Easy.
I should write a book, I'm close now. LOL

Nathan

Grumpy.... So your sales structure encourages a mark up?

25% of profit... what's your average profit margin on a job?

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Nathan

"He is no fool who gives what he cannot keep to gain that which he cannot lose." - Jim Elliot

pgriz

Pricing is per work item (so much per square of roof to strip or install, so much for a vent install, so much for chimney flashing, etc.), and commission is 10% of gross. Each estimate is checked by the field super and spot-checked by me. Salesperson gets paid when we get paid. If salesman on probation - no draw, if past probation, draw up to $5,000. Any savings on the project budget is split 50% with the work team (with includes the salesman, the field super, and the installers) and the company. No-one is whining (yet), but give it time.

Grumpy

Nathan, I would say it encourages accuracy. Yes if I mark up the job I make more but the sale becomes harder. If I make a mistake I can end up paying for the job... so it evens out and I am fine with that. Honestly on some jobs I can make 7% and I've made 20% on other jobs. I've never tracked the average and I suppose that'd be a good idea I'd have to add the data into my spreadhseet to know for sure.

It's funny really we make the most money when we use subs for situations like window replacement or vinyl siding... but I am under the most pressure to keep our roofer employees busy. I'll never understand the logic.

sldannolfo

I make 4% commission on each sale and also take $800 a week as a draw. Can you tell me what the standard is for contracting sales across the country?

buildpinnacle

Bump.....

So many options here. I used to get $1200 / week salary and 3% on each sale. I was selling around $2 mill / year. I would have rather been on a flat 10%, or even a percentage of the gross. As an owner, I like the flat fee. It is easy to add to the estimate, your profits aren't discussed or known, and it's easy to keep track of insofar as job costs, etc when figuring sales commissions. The salesmen can take a small draw based on turning in X amount of estimates each week for the first 3 to 4 weeks until they get a sale. They get paid as checks come in. If they make 10% of gross sale, they bring in $55,000 one week, they make $5,500 that week. There has to be a minimum sales price per item and they have to make a minimum gross on each job to be commission eligible. Let's say it's 40%. There would have to be some owner discretion on mistakes. If the crew screws up one side and has to re-shingle it or doesn't get it watertight prior to a storm and interiors come into play, you can't really hold that against the salesman. Hopefully, that is the exception and not the rule or you won't be in business long, anyway.

As a salesman, I would like to work off of a percentage of gross. It encourages selling the job and not estimating it and getting better money. There is more incentive to get $11K instead of the company minimum $10K on a said job as you would be making much more on that extra grand as it would be pure profit. However, most roofing companies are not set up with a good sales support system, office help, bookkeepers, etc and alot of roofing company owners aren't really good with paperwork, so finding out the true job costs of each single item including every extra thing the super or crew leader had to run back to ABC and get could get crazy and not figured in if you're not organized. This is a recipe for disaster if you don't have a good system on Cost of Goods Sold.

On average, I would say this:

Percentage of sale: 8-10% on company supplied leads /12% on salesman supplied leads

Percentage of gross: 20% on company supplied / 25-30% on salesman supplied leads

A good salesman who can sell 1.5 mill to 2.0 mill per year at 40% gross margins should make $150K-200K per year.

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