Sales commission advice needed... NEW SUBFORUM SETUP FOR THIS!
 

OK background: I just started a new business that is taking off in Austin and is launching next week in Dublin and Belfast. I plan to expand to other cities but will need salespeople and am wondering what a fair compensation is.

The job is quite easy, it is a service that is sold to a bar, restaurant, or similar venue... the service is very cheap (~$100/month) and is currently being VERY well received (i.e. selling itself, at the least a very easy sell).

Based on the above... what is a fair commission per sale? I plan for each sale to CONTINUAL pay out to the salesperson as long as they remain a customer... this encourages the salesperson to maintain the relationship and gives them a nice residual income should they decide to move on at some point.

My gut tells me the proper price point is between $15-$30, which works out to $1500-$3000/month in CONTINUOUS income once they have sold 100 clients (the LOW, LOW, LOW estimate for any given region). The more realistic estimate is in the range of 200-250.. so to play it safe.. they SHOULD be able to build a client base to 200 and earn between $3k-$6k /month

OK! Now ..what is the EXACT figure that seems the most FAIR and will be able to attract competent salespeople without being exorbitant?

Poll to follow

That really depends on what the service costs you.

how many total salepersons will you hire per market?

not really, I want to see what is appropriate simply based on the work a salesperson does.. doesn't matter if I make $10 or $50 per sale, I'm not interested in a figure based on anything but what the salesperson's time is worth. Having never worked sales, this is hard to calculate althout I think I have an idea.

Probably only the 1 per market... giving them the freedom to work the market as they see fit and not worry about ganked sales.

If the service costs you $90 a month per client, then you cant pay them any money at all, the cost does matter.

I work in Sales.

It will probably take your guys more than an hour to convince someone to put something in their bar.

$15 for a couple hours is nothing. I wouldn't take that job. Maybe once they reach a certain amount of clients $15 is something, but usually with stuff like that you give them a base pay at first until they reach a certain amount of Sales per month, then get them commission.

I think he said... "the service is very cheap (~$100/month) and is currently being VERY well received".

I guess it depends on how hard is each sell perceived to be... how long will it take someone to close the deal?

If this is one of those things that can be sold in 1 or 2 meetings with the client, and you're talking about $1,200 the client is going to invest annually... then $25 per deal for the rep would be $300 annually. They sign up 100 clients and you have a $30,000 a year gig.

How does tax play into this one? What does the rep have to do to make sure he's accounting accurately for taxes, etc? Do you have all of that in line?

Also, how are you set up to pay the reps? Are you cutting checks or making online deposits after each transaction monthly or are you waiting until the end of a month (say Jan 31) and then paying the rep in full for January at the beginning or end of February?

Are they 100% commission or are they employees with some type of base/draw and benefits?

Thats what he is selling the service for, not how much it costs him. Unless I am reading it wrong.

100% commission

Remember, it's recurring. So 2 hours of work comes down to $180 a year. Which I would take happily. I would never suggest paying your sales guys anything over about 7%. They'll bitch, they'll whine, and they'll complain they're worth more. But they're really primadonna wannabe athletes and can be replaced by anyone else with a mouth. That said, you get this going in Seattle shoot me a smoke Austin. I have experience in selling bar owners, and am always looking for opportunities to make money.

1 suggestion is if this is a software type operation, throw in a 1 time "user license fee" and give your sales a guy a good portion of it to give him some up front incentive while he's building a long term income base. Seriously, hollar at me if you want to chat about this some more.

My guess is you won't have 'employees'... you'll have contract employees or whatever the legal name for that is, correct?

Yeah, at 100% commission he'll just I-9 them. Independent contractors. Which does mean the 7% goes out the window. Probably between $15-$25 per sale depending on what kind of projected volume and close rate is involved.

Depends on the product and level of person you're targeting... sales is a relationship business. Much like everything else, you have all sorts of people in sales... you get what you pay for in that regard.

If you want high quality reps that will maintain great relationships - be selective, make it worth their time and easy from the perspective of getting paid.