peteVA

That's the thing. There are really all sorts of situations and solutions.

There are company sales reps, usually referred to as salesmen or salespeople. The card may say rep, but not quite the same thing.

Then there are what are generally called "manufacturers' reps" or "manufacturers' agents". These are sometimes individuals, but more often comapanies who represent or sell for a variety of companies. They may sell your tee shirts, someone elses blouses, someone elses blue jeans, etc. They may also rep for some accessory lines and maybe even display fixtures and other related products.

By using a rep organization you can have a much broader footprint than you will with a single salesperson. Many rep organizations cover multiple states, or entire regions. They may also sell to retailers you may not even consider prospects. You could end up with your tees in a car wash waiting area.

The thing is there are no hard and fast rules. What works best for you?

Years ago I worked for a company selling hardware that had 6 price levels, with commissions as high as 40%, down to 5%. The 5% was for approved "national accounts", the rest was entirely my option. And I could sell different products off different price schedules. Sort of whatever the traffic will bear.

Think outside the box!

A museum gift shop is going to sell the same item for more than a flea market. Why shouldn't you make a bit more off the gift shop? Share the wealth!
.

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guest3300

People will work to their incentive (pay) so if you pay a commission without the requirement of collecting then you may find yourself in a position of 'manufactured' sales just so the guy gets some money.

You do need to have a policy though.

As far as commission, I would set a percent for sales and a bonus percent if he goes over that goal. As an example, you may want to set goals of

$100,000 gross per month
$300,000 gross per quarter
$1.2 million gross per fiscal year

Then you could pay 10% on gross sales. Give a 2% bonus for reaching each goal. This way, if the sales are uneven during the year he can still earn a bonus and will work to reach the monthly and quarterly goals during the slow periods.

So, if you had a sales person that made all 3 goals throughout the year, you would be paying him 16% of his gross.

You also need to consider if you are going to give the sales person a draw on future commissions. This allows him to count on some income during his first 90 days while you are producing product and collecting. After that you are basically balancing his commission against the draw.

Finally, are you going to pay expenses, give a car allowance, etc. I wouldn't expect a sales person to pay their own expenses at 10%. You could bump the % and not cover expenses or you could just give something like 'up to 10% of gross' to be reimbursed in expenses and let him take the rest on his personal taxes.

hope this helps.

 

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studog79

Quote: Originally Posted by eternalunltd Tim, Good question. Let me throw the question back at the group. I want a sales rep that will produce the best results at the lowest cost to us possible.

If you really want to make money you want to pay your sales person as much as you can. You have to be willing to pay the sales person more than what the owner makes. This is a very hard concept for most people to handle. Think of it this way if you are only paying commissions then the more a sales people make the more the owner makes. We have a tiered % which allows the more our sales people sell they make a greater % of commission.

 

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peteVA

Amen!

My brother and I were in business together for some time and I could never get that in his head. Both good salespeople and store managers would get to a point where he would be looking for ways to get rid of them because "they were making too much."

I managed to keep them, but he and even more his wife would harp on it every chance they got.
.

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dyer

okay boys and girls here's my two cents...I have a line of tees thermals etc.A sales rep approached me[i'm currently in about 10 stores nationally also japan.i told him we would try it for two months see what he can do and we'd agree after that time what his commission would be somewhere between 10 and 15%.
I also meet these hungry inexperienced kids who like my shirts i give em catalogs and samples and offer them 10% It seems to be working out just fine it's best if they do it as a side thing and they have jobs.I have gotten into quite a few doors this way.Best of luck to all of you.
jeff

 

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dyer

p.s. you are a smart guy pete

 

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