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How to Pay a Sales Person??

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Old October 2nd, 2008, 02:56 PM   #1 (permalink)
cobra cobra is offline
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Default How to Pay a Sales Person??

Hi there

I'm new to the forum. I own a Promotion Products Company that does in-house screen printing and embroidery. I bought it 4 years ago however the business is well over 30 years old. Lots of repeat clients and some smaller new ones call in. Hence we only basically do orders that call in, or ones I personally go after. There is lots of competition in the marketplace that are much much larger then us with huge sales staff. So I know I need to have someone out in the field if I'm going to get more business or even keep the biz i have.

My question is - I want to hire a Sales Person but I have no idea on how to pay them. How do i compensate them for their work?

I saw an answer to this question (can't find it now) but it said something about 10 or 12% commission and bonus- but I dont know what that commission is paid on (ie 10% of the total order received?) or how a bonus would work or if they would get some guaranteed salary as well.

Can anyone provide a good formula I could work from?

Thanks kindly

Cobra
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Old October 14th, 2008, 05:35 PM   #2 (permalink)
greatgiftsandideas greatgiftsandideas is offline
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Default Re: How to Pay a Sales Person??

Currently, for my sublimation business we don't use a sales rep. We plan to in the future. However, I am also an accounting manager/Payroll Manager for an Optical Company that has been in business for the past 30 years also. We have several sales reps and each are paid differently. We have in-house telemarketers and road rep sales persons. Road reps are not on the payroll and receive a check each month with a 1099 at year end. Telemarketers are on the Payroll and work in-house.

Our road reps are paid a 20% commission on paid sales minus the shipping costs. Shipping costs are removed first. Then paid 20% after. We don't make money on shipping and neither do they. If sales are past due by over 90 days, the commission after shipping is removed drops to 10% minus shipping. Over 120 days past due drops to 5%. After 150 days no commission. Most companies stop at 90 days.

Our in house telemarketers who have worked less than 2 years get paid $6 plus 5% sales commission on paid sales after total shipping costs on paid items are removed. Has always worked out to be a $1-2 more than minimum wage.

After 2 years of service, our telemarketers receive 10% sales commission after shipping costs are removed. Our sales reps work hard. If after 2 years, putting them on 10% commission is less than they would have been paid on $6 plus 5% commission, well, then you may have guessed... time for them to be replaced. The company isn't making money nor is the rep if we keep them around.

My sister and I just started our sublimation business, but plan to follow the same process or similar process once we get to that point.

Hope this helps you.






Quote:
Originally Posted by cobra
Hi there

I'm new to the forum. I own a Promotion Products Company that does in-house screen printing and embroidery. I bought it 4 years ago however the business is well over 30 years old. Lots of repeat clients and some smaller new ones call in. Hence we only basically do orders that call in, or ones I personally go after. There is lots of competition in the marketplace that are much much larger then us with huge sales staff. So I know I need to have someone out in the field if I'm going to get more business or even keep the biz i have.

My question is - I want to hire a Sales Person but I have no idea on how to pay them. How do i compensate them for their work?

I saw an answer to this question (can't find it now) but it said something about 10 or 12% commission and bonus- but I dont know what that commission is paid on (ie 10% of the total order received?) or how a bonus would work or if they would get some guaranteed salary as well.

Can anyone provide a good formula I could work from?

Thanks kindly

Cobra
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