Salesman percentage

dcapparelinc · January 4th, 2011, 02:00 PM

What is a normal percentage to pay a sales rep selling embroidery and screen printed items for our business? I would like to offer a percentage of the total job profit so they want to hold a good profit margin. What is fair in the industry? This is the first time for me hiring a sales person. I'm thinking 20% of the profit????

Eric · January 4th, 2011, 04:54 PM

Commission doesn't (usually) work like that. Its a straight percentage of the merchandise total. Here's why, on different orders you will make different profits, weather it be light garments, dark garments, consumables, etc. On bigger orders you will cut deals and things like that. Whomever you are paying the commission to, is going to want to know exctly how to figure his/her paycheck.

Although, I am not a screen printer, I only embroider here is what I do:

My rep's are paid a commission percentage... I pay them 12% straight commission, on an order that they write personally for the customer. If their customer calls the order into our office then the rep gets paid 5%, I do this because it makes sure the reps keep on top of the customers needs.

I also pay my reps bonuses here and there, for new customers, sales goals, and things like that.

Just some food for thought.

dcapparelinc · January 4th, 2011, 07:27 PM

thanks alot for the input eric! i was thinking kind of along the same lines. i figured it would be a little harder to figure the paycheck as i would have to go through and figure exact profits and then figure the percentage (to much work). the deal i offer my guys that work for me know is 10% of the total sale. i think i will just stick with that. i do like the idea of a bonus program for the actual sales person. maybe like a certain dollar amount for so many new clients a month or something...

again, thanks for your input!

Alan_Hepburn · January 5th, 2011, 10:16 PM

I don't have any sales reps, but when a friend or relative recommends us for a job, and we end up with a job through that recommendation we give the friend or relative 10% of the total as a referral fee. It's worked for us so far, but we're mostly hobby-level embroidering, not commercial.

fwscreener · January 6th, 2011, 06:34 PM

What we do here is we have our wholesale and retail price sheets, our sales people get paid anything over the wholesale price. This gives them the flexibility to maximize thier profits. It also makes it easy for them to be able to adjust the price to make the sale. It also makes it easy to get people started in the business. They can only sell above retail with our approval or below wholesale. Lets face it sometimes somes job are just too easy we give them a bonus and we give bonuses at the end of the year based on profit.

Works for us.

Eric · January 8th, 2011, 12:08 AM

I give a few bonuses, I give the rep's $50 for opening a new account. If that customer spends over $2,500 in the first 6 months, they get another $50. At the end of the year I give them a $2,500 bonus for every $1 million in sales, with no cap.

We use an accounting system called Apparel Magic, it is designed for the apparel industry, we've had it modified in a few places to fit our needs. It's rather pricey (STARTING price is $5,000 for a single user copy) took some (ok, a lot of) getting used to, but its great, and it runs on MAC!

It keeps track of payments, billing, has manufacturing modules build in, tracks sales, royalties, you can set user info to give you sales team access to inventory and orders, but not let them see your account balances, on and on. It almost does too much!

As far as deals gone bad ... This depends on a lot of things.
The rep's commission is recorded when the order ships. So, if we get a bad check, we eat it, the rep still gets paid. Its not technically their fault a customer can't pay. We'll often times ask the reps to go visit a bad customer and ask what the deal is? Although, we take no crap from bad check-er's I'm an !@#$% when it comes to billing. At 30 days you get a statement, 60 you get a phone call, 90 you get a certified letter, 120 we go to court. I will get my money

Occasionally, we get a deal that just seems "fishy" in general, if we have a bad feeling about a new customer placing large orders out of the gate, we ask for either a 50% deposit, or a credit card. Most don't squabble, and if they do, there's usually a reason.

We generally don't take commissions away from reps at all, the ONLY exception is if a rep takes an order and just plain screws it up. Like if the rep quotes/writes an order for Ladies jackets, and then enters it into the system as Mens jackets. Then yes, they will get their commission taken away, because it was their mistake. Now, if WE (office / art / production) screw up, say it was supposed to be Navy on Ash, and we sew Ash on Navy (did that last week) we pay anyway, even if the customer cancels. Its not fair to the rep in Minnesota, that the warehouse in Massachusetts screwed up.

Hope I didn't ramble on too much.
Let me know if you have any other questions.

I would love to know how it works in the screenprint world, someday I would love to have a setup for screenprinting. Right now I job it out to a friend, it works well, we throw each other jobs, but he sometimes he's a little slow on large orders.

Eric · January 8th, 2011, 12:30 AM

Sorry ... Forgot.

In regards to FW's comment,

We have something similar, we give the sales reps price sheets that says just how low they are allowed to go on items, if they feel the price can go lower, they must have authorization to do so.

They can also take it out of their commission, in other words take say a 10% commission on the order instead of a 12%. I generally don't like to let them do this, because of the paperwork involved in keeping track of all the percentages, but if it lands the deal, so be it. I had a rep in the summer do it on a cap order, it was an easy order, but the customer just kept squeezing, I was making literally pennies per pc. on the job and just couldn't go lower, so the rep took 3% out of his cut, and got the deal.

Like you said, sometimes you have those "fish in a barrel" jobs that are easy money, other times you have those 12 color nightmares.

Earl Smith · January 8th, 2011, 08:25 AM

Hi Eric,
You seem well clued up on working with Salesman/Reps. You provided this information before but I forgot to ask. How are these reps employed by you? Are they "self employed" and therefore only get paid and live off of the commission , or are they employed by you on a basic salary and the commision is an extra ?

Earl.

Eric · January 9th, 2011, 02:35 PM

They are self employed / independant contractors.

I pay them commission, and commission only. They are responsible for filing and paying their own taxes and expenses, etc.

I give them what is called a 1099 form, that just says that they were paid "X" number of dollars, and that no taxes were with held.