Salesman Help

ICW

Hello, I am new to this forum and I have a question.I own a business that sells powerwasher and cleanig chemicals along with sales and sevice of fire extinguishers.sales and service of fire serpresion systoms and installs.I am looking at getting a 1099 salesman and I would like some ideas on how you would pay such a person.

dougchips

With a check---never cash!

Welcome to the site.

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DavidC

When you 1099 him you are in effect saying he is free to work for others anytime he chooses. I don't think I want my salesperson working for anyone else. Pay him through your payroll.

Good Luck
Dave

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NAV

If you are looking for an outside sales rep that you pay on a 1099 you have to figure what percentage of the sale that you want to pay in commission.

example: if you average 30% profit you can afford to pay 10% commission

Or if he is making the price and that affects the profit you can pay him a percentage of the profit.

Example: he makes a $10,000 sale at 30% profit. you pay him lets say 33% of the profit. this can also be a sliding scale dependent on what the profit of the sale came in at.

that roughly keeps the payment to your guy the same as straight commission on the entire job but also keeps the profit up and an incentive to sell at a higher price.

you might want to offer fuel reimbursements, expense accounts etc.

jamesfl

As a salesman, I agree with NAV. My pay is very similar, however no fuel or expense, although my average sale is 8-12K.(roofing)

ICW

Thanks for the replys,I have not hired a salesman before and was just woundering the best way to go about it.We have always did it are selfs but now it would be nice to have a preson doing this so we can take care of business in other places.Thanks again.

Grumpy

Back up and start from the end.

Determine how much this person should be earning per year. Ok, now determine how much they are capable of selling in that given year.

Ok let's say you want them to earn $50k in a year, and you think they should be able to sell 1 million dollars in revenue per year. That means you give them a 5% commission. $50,000.00 / $1,000,000.00 = 0.05 or 5%. Simple


The other option would be to pay a split on profit. Again start from the back and work your way forward. Let's say again that they should earn $50k and can sell 1 mil in equipment in a year. How much profit is in the average sale? Only you would know this. Let's say an average sale is $5k and there is $1k in gross profit, so your costs associated to do the job before overhead would be $4k. With me so far? Now let's use my numbers, 1 mil sales / 5k average sale = 200 sales. $50k earnings / 200 = $250 commission per sale. $1000 average profit per sale / $250 average commission per sale = 25% split on gross profit per sale, or 25% commission on gross profit.

Got it?


Edit: Keep in mind you're probably goign to have to raise your prices to include this persons' earning how ever you decide to pay.

tin man

Grumpy why are you asking all the time how to pay salesperson?Now you giving advice?
I don't get it.I am starting to think you are not a closer so that is why you dint know one when you got one.What I think you need is a sales manager,old suede shoe,who knows what to look for.

I know it sounds harsh but a ship is only as good as its captain.Your strength may be in lead generation or running the job ,not sales.

Play to your strengths ,why keep pounding your head,I don't think it has any thing to due with pay-out.If your leads are like picking up sticks why do you need sales person.

A chicken and a half laid a egg and a half ,in a day in a half,how much would a pound of butter weight?

That's great sell a million a year get 50Gs how can I sign up

Grumpy

All the time asking? Hmmm define all the time. I do recall asking for advice a few times. I've been a full time salesman and now employ full time salesmen, I think I have some value to add to this thread. I ask for advice from my peers on all subjects from time to time because I want to make sure I am always doing what is mutually beneficial for myself and those that work for me. This thread has nothign to do with how I pay, this thread has how to do with the original poster can figure their own commission structure without using someone elses going rate. Knowledge is power and now the original poster has the empowerment to make an educated decision.

BTW the numbers I posted are "for example" anybody of intelligence would have relaized that. Would you have preferred I say "Pay him 10%" and call it a day without knowing anything about the original poster's business plan or situation, or local what local people are earning. That isn't of any help to the original poster or any readers of this thread to throw out a bull kaka number without a substantiating formula. As the original poster said much of his work is actually in selling of EQUIPMENT and some services.

MY personal strength is definetly in sales. No scratch that, customer service. I no longer consider myself to be a sales person as I beleive that to be beneath me. I am a professional. I run rings around closers without using pressure or gimicks. I may have asked how other people pay but I have never asked how to sell to a customer. This is something I know. The problems I have with my company are my ill-hiring of peope who can't live up to their responsibilities then I have to work extra hard to pick up their slack. Besides what do my own sales abilities have anything to do with how to pay a sales person. That's apples - oranges.

Why do I need salespeople? C'mon man you obviously pick and choose which threads you read. Why in gods name would anyone go into business for themselves then do all the work? I'll never comprehend this, if you're going to do that work for someone else. Why need salesmen? Because no matter how good you are there are only 24 hours in the day. I can only sell so much in a week, month or year. I want a business that runs it's self not a business that needs me to bust my ass to survive and a business that shuts down when I take vacations.

Tin men are dead, closer. Run along now with your tin man gimicks, tricks and high pressure. Naming yourself after a lie and a cheat, yeah good call there dude. (Anyone reading this not sure what I am talking about, go rent the movie "tin men". They are the guys who lied and cheated their way through the 70's with aluminum siding.) Next time you choose to talk down on someone make sure you know what you are talking about first. Educate yourself.