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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