T-Shirt Forums banner

1 - 20 of 24 Posts

·
Registered
Joined
·
19 Posts
Discussion Starter #1
I have read through all the forums on "Sales Rep" info. It seems that everyone out there is advising to pay sales reps somewhere between 10%-20%. With this in mind, here are my questions:

#1. Do sales reps generally have flexibility to play with product pricing?

#2. If yes to #1, does their % of gross sales get adjusted downward if they make a sales for a decreased price/unit?

#3. Should you pay your sales reps for a sale before or after the customer pays their bill on the sale?

Thanks in advance for any answers. Much appreciated!
 

·
Moderator
Joined
·
2,957 Posts
I wouldn't give them the latitude to play with pricing. Set wholesale pricing, and keep it consistent.

Never, EVER pay them until you receive payment from the retailer. This is standard and expected.;)

But I would also make it a practice to pay them AS SOON AS you get paid by the retailer. Good idea to keep those folks happy.:)
 

·
Registered
Joined
·
4,071 Posts
1. Depends on you. Do you want them to have that flexibility? Some do, some don't.
2. Not usually. Generally they would only lower the pricing for a higher sales volume which is desirable so you wouldn't penalize them for bringing you more business.
3. Every employee I've had, salespeople included, expected to be paid on a regular and timely basis. Whether I get paid is my problem, you cannot withhold a person's pay because of your own problems collecting. And any salesperson that would agree to forgo pay until you get paid is probably desperate and not someone you want to hire in the first place.
 

·
Registered
Joined
·
841 Posts
3. Every employee I've had, salespeople included, expected to be paid on a regular and timely basis. Whether I get paid is my problem, you cannot withhold a person's pay because of your own problems collecting. And any salesperson that would agree to forgo pay until you get paid is probably desperate and not someone you want to hire in the first place.
If the sales person is paid commission then commission should NEVER be paid until customer's payment is collected. Any sales person that doesn't understand this is either a Newbie or you do not want them. In my 20+ years of owning businesses and designing and writing payroll systems for some major corporations this is the way it always works. You could also have payments made on a draw.
 

·
Registered
Joined
·
4,071 Posts
Edit: Let me explain in better detail. The last company I worked for we had two kinds of customers, cash and credit. We didn't extend credit to every Tom, Dick and Harry. A cash customer is no problem, they pay when the print order is picked up or delivered. A credit customer is checked out and the majority of them pay, probably 98% or better pay their bills in a timely fashion. Occasionally someone gets behind 120-180 days, usually because of some silly BS like an incorrect PO# or a dispute over the amount. Commissions and bonuses weren't paid out immediately, there was always a lag time but the company didn't try to make people wait indefinitely to get paid because many companies pay on a 90 day cycle. In truth, the salespeople would always get paid but their commission checks ran 60 or 90 days behind, I can't remember which. Managers were also paid but if a customer didn't pay then the commission or bonus from that customer would be deducted from future earnings (this may have been true for the salespeople also, I'm not positive. the sales program was revised almost every year).
 

·
Registered
Joined
·
1,624 Posts
I have read through all the forums on "Sales Rep" info. It seems that everyone out there is advising to pay sales reps somewhere between 10%-20%. With this in mind, here are my questions:

#1. Do sales reps generally have flexibility to play with product pricing?

#2. If yes to #1, does their % of gross sales get adjusted downward if they make a sales for a decreased price/unit?

#3. Should you pay your sales reps for a sale before or after the customer pays their bill on the sale?

Thanks in advance for any answers. Much appreciated!
I would say:

1) No....unless approved by me.

2) No....they just make less based on the same % on a lower amount.

3) After the money is collected. I would think that a sales rep for most smaller businesses would also be responsible for following up with the customer regarding any payment issues. If they get paid regardless, then there would be very little incentive to make sure the customer pays. The only exception may be something out of the reps control.
 

·
Registered
Joined
·
367 Posts
My turn -

1 - Yes and no. You can supply your salespeople with several price schedules, with them understanding that they should use the higher pricing whenever possible.

2 - The varying price schedules will also have varying commission percentages. Say 20 / 15 / 10 and even a 5 or 7 for those large accounts they really don't want to lose.

3 - After a probationary period they should be paid on sales, not collections. At the same time, collecting should be their responsibility and at the 90 past due point they should have paid commissions charged back to them. You could have a period of another 90 days during which if the account does pay the commissions will be re-paid, or have a partial deduction month to month. After the 6 month period they would lose any commissions with no chance of getting them back.

You have to walk a fine line between leaning too much either way - company or salesperson. As noted above, the salesperson should have as steady an income as possible. And the company should expect good judgement on the part of the salesperson.

But it is seldom the salesperson who makes the credit decision, and even where they have some latitude there is someone with the company who can say No.

The time when you have to be most concerned is during the initial period, when the salesperson is new and two things can happen. One is that in a effort to impress with early sales they make some sales to questionable accounts, And the other is they make sales to friends with the intention of collecting big commissions and moving on, with concern at all about later payment.

Back to #1. Having several price schedules, with lower commissions on lower pricing, does give the salesperson some leeway. It can even produce more sales by acting as an incentive for the buyer to place larger orders. You can even have different minimum order amounts for each, but allow the salesperson to ignore them.

"We do have a better price, but it is for orders of nnn or more. I can't guarantee you my boss will OK it, but even with your order about half of the minimum, as a new account, let me try and run it by my boss." You could come back with: "I got the approval on your order at the lower price. The boss said we'd ship the first order at that price and we would keep you on that price for the first xxx months, even though you don't meet the minimum. After that we'll take a look at things and see where we stand."
.
 

·
Moderator
Joined
·
2,957 Posts
In the past year I have interviewed over 100 sales reps in the apparel industry with experience ranging from 2 years to 30+ years.

Every last one of them say that if they are commissioned based, the industry standard is that they don't get paid, until the retailer pays for the order. If the retailer never pays for the order, they never get paid.

There are "manufacturers reps" that are salaried, and get paid on a regular basis, but it doesn't seem like we're talking about them, because we're talking commission.

Also, it's important to keep in mind that people here run different types of businesses.

Some people are in the business of providing print services and some people are in the business of establishing and/or running a clothing line.

In the latter, we deal with retail store owners, and commissioned sales people. And in this part of the industry, the commissioned sales people never get paid until the retail store owner (our customer) pays for their merchandise.

In the business of printing services, it may be different.

But having seen a few of Sean's posts, and what type of business he runs, I'm pretty sure his questions have to deal with his clothing line and how to pay his commissioned sales people after they have sold to retail stores.

So, Stuart is entirely correct. In this part of the industry, commissioned sales people never get paid until the order is paid for, and any sales rep that expects different is either VERY new, or like he said, you don't want them.

They know that this is the standard, and expect it.
 

·
Registered
Joined
·
4,071 Posts
That's interesting. Most all my experience is in various print companies. If you asked me to be sales, collections and credit or I didn't get paid, I would expect a nice salary.

What is the typical salary and commission rate for a mid-career apparel salesman?
 

·
Moderator
Joined
·
2,957 Posts
Probably 10-12%.

If they take on a new line, it's more around 15%, because the line is unproven.

That's of total sales. But also, most of them carry more than 1 line.

Not bad money if you have a couple of big retail accounts, and you carry some popular lines.
 

·
Registered
Joined
·
367 Posts
Greg, I visit forums with several objectives. By far the largest is to pass on knowledge I've gained over the years to newbies. Areas I feel particularly qualified are sales taxes, accounting, POS systems, bar codes and several others.

The second thing I like to do is serve as a "devil's advocate" to encourage different points of view in what are sometimes entrenched philosophies.

Think outside the box.

I'd say that was the basis of my reply above. If 90% of the garment manufacturers in the country pay that way, maybe there is room for something else. I hiring an established salesperson who is familiar with your type pay plan, fine.

But, I'd say many here are newbies in business, or at least at the "just spreading their wings" stage and might not be looking for experienced "old timers" to sell exciting new products, or be the type of start up operation that an experienced salesperson would even consider.

Since a forum is a place for friendly dialogue, I am interested in how it came to be that you ended up interviewing 100 salespeople within a year? Are your standards so high? Your turnover so great? You do it as a hobby? You are a recruiter?

Not giving you a hard time, just curious.
.
 

·
Registered
Joined
·
19 Posts
Discussion Starter #12
You guys/gals ROCK! This is the best thread I have ever seen on this forum thus far. Way more than I was expecting.

Keep it up as it sounds like there is still some dispute over standard practices.

Much obliged!
 

·
Registered
Joined
·
1,217 Posts
Are you wanting someone personally, meaning you hire them and they work for you only, or professionally, hiring a firm that does this for a living and sells your product and other company's products as well?
Around my immediate area, I would be hardpressed to find a decent sales rep that would be willing to take a commission only position. I would be more likely to find someone that I could pay on an hourly basis and then give them a bonus commission for each sale that they close.
 

·
Registered
Joined
·
19 Posts
Discussion Starter #14
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. I also want a sales rep/company rep that will be with us long term.

What has everyone experienced in regard to working with individual sales rep vs. "a firm"?

Where would I go to find a reputable "firm"?

What is the difference between the two? Advantages and disadvantages of each?
 

·
Moderator
Joined
·
2,957 Posts
Hey, Pete, no problem.

My ultimate goal is to get my products in retail stores.

After learning how the apparel industry works, I figured that I had a few options. Rep my line myself, hire a rep, or do a combination of both.

I'm doing a combination.

There were several things that I kept in mind when trying to find reps.

1. Experienced reps typically don't want to take on new lines. They want a proven commodity. Understandable because it's straight commission.

2. Most reps are independent "road" reps, so they need to know that they are going to make enough money from the sale of the products to cover their travel.

3. Most reps carry more than 1 line.

I went on a quest to find out how to hire a rep. There's a post that I made about 2 years ago about how to find a rep.

http://www.t-shirtforums.com/offline-retail-tradeshows/t1934.html#post10011

In that post I refer to what I call the "grunt method" for finding a rep. I've used that method, and it worked pretty well.

Something else that I have done (while keeping in mind the things I mentioned) is subscribed to a site called rephunter.com.

It's pretty expensive, but a great resource if your are serious about finding reps.

Another thing that I have done is place ads on craigslist in different cities.

This has worked out great. For the craigslist ads, I only want reps in that particular city, not a road rep. So, I can find an experienced rep that lives in that city, and they don't have to worry about travel, etc. They can easily show the line in their city and surrounding areas.

So with these methods, I have interviewed well over 100 reps to rep our line. I must say that it's been a very tedious process.

Also, it has been fruitful. We have several reps that are based in major cities that we have targeted, and 1 road rep.

The "local" reps all have at least 2 years experience, and the road rep has about 6.

While it was difficult being a new line, the ones that we did end up hiring were very excited about the concept of our line, and the products we carry. So, it's not just an interview for the rep, it's an interview for you as well. Reps aren't going to take on a line that they don't think can be successful (that they can sell).

I hope that helps, and any more questions, feel free to ask.:)
 

·
Registered
Joined
·
367 Posts
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!
.
 

·
Registered
Joined
·
9,135 Posts
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.
 

·
Registered
Joined
·
841 Posts
eternalunltd said:
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.
 

·
Registered
Joined
·
367 Posts
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.
.
 

·
Registered
Joined
·
72 Posts
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
 
1 - 20 of 24 Posts
Top