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

[AustinChief]

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

[Mr. Flopnuts]

Originally Posted by Mile High Mania

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.

That always makes sense, but starting off with little to offer, choose wisely.

[Buck]

Originally Posted by Mr. Flopnuts

Remember, it's recurring. So 2 hours of work comes down to $180 a year. Which I would take happily.

Good point.

I want a little more incentive up front though.

Maybe $25 the month you land them, $20 from there on out.

[Mile High Mania]

Originally Posted by Buzz

Is there a car / gas allowance? Do they start with a base salary until they build up clients? What is a livable wage in Austin? Let's just say to bring home $2,500 at $20 a sale that would be 125 sales or clients. Is that achievable?

It is what it is... $25 (my vote) per deal per month that you close. You're not an 'employee', you're an independent contractor and your geography is your territory. You're responsible for all expenses, you get no benefits... bust your ass and get 150 happy clients to pay their $100 a month.

$100 service X 150 clients X 12 months = $180,000 in revenue
The sales guy would receive $25 X 150 X 12 = $45,000 annually.

Do it right and this is a nice side gig.

[Mr. Flopnuts]

Originally Posted by BuckinKaeding

Good point.

I want a little more incentive up front though.

Maybe $25 the month you land them, $20 from there on out.

Or better yet, a 1 time "user license fee" of $195 in which you get half and proceed to collect your $20 a month. That is a great solution for start up software companies hiring I-9 salesmen.

[AustinChief]

Originally Posted by BuckinKaeding

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

So far this isn't the case... so far the process is working like this...

Go in possible client's place, try to talk to relevent person, if no go then leave literature, otherwise explain service (takes 10-15 mins max.) and leave with sale (or 2nd meeting which has always lead to sale) or again if not interested yet then leave literature.

So, the process is VERY easy and VERY quick.

[Buck]

Originally Posted by Mr. Flopnuts

Or better yet, a 1 time "user license fee" of $195 in which you get half and proceed to collect your $20 a month. That is a great solution for start up software companies hiring I-9 salesmen.

Sure, but your main selling point is that its only $100 a month and its a great service, and then you mention right before you are about to close the $195 license fee and you lose the client. Not always, but that would happen.

[Mile High Mania]

Originally Posted by AustinChief

So far this isn't the case... so far the process is working like this...

Go in possible client's place, try to talk to relevent person, if no go then leave literature, otherwise explain service (takes 10-15 mins max.) and leave with sale (or 2nd meeting which has always lead to sale) or again if not interested yet then leave literature.

So, the process is VERY easy and VERY quick.

Depending on the type of service, I could probably do this in my spare time... there's a ton of bar activity in Dallas.

[kstater]

Originally Posted by AustinChief

So far this isn't the case... so far the process is working like this...

Go in possible client's place, try to talk to relevent person, if no go then leave literature, otherwise explain service (takes 10-15 mins max.) and leave with sale (or 2nd meeting which has always lead to sale) or again if not interested yet then leave literature.

So, the process is VERY easy and VERY quick.

You want to expand into Arkansas?

[Buck]

Originally Posted by AustinChief

So far this isn't the case... so far the process is working like this...

Go in possible client's place, try to talk to relevent person, if no go then leave literature, otherwise explain service (takes 10-15 mins max.) and leave with sale (or 2nd meeting which has always lead to sale) or again if not interested yet then leave literature.

So, the process is VERY easy and VERY quick.

Sounds pretty interesting. If you need someone for the SD area let me know, I might like to give it a try.

[Mr. Flopnuts]

Originally Posted by BuckinKaeding

Sure, but your main selling point is that its only $100 a month and its a great service, and then you mention right before you are about to close the $195 license fee and you lose the client. Not always, but that would happen.

Depends on how valuable the service is. If you're willing to invest $1200 a year into a software program that is greatly going to help your business, $195 up front is nothing. And honestly, when I was doing poker in bars the first thing bar owners asked me was the up front licensing fee. They expected it. It was a lot easier to sell when I told them there wasn't one, but I could've got them on one if I'd pushed it.

[Mile High Mania]

Oh and I know my brother could be a great option for you in Central Arkansas.. he's very well connected to the bar scene. He's a firefighter and always looking for a side gig. Shoot me a PM when you get details and look to expand.

[Buck]

Originally Posted by Mr. Flopnuts

Depends on how valuable the service is. If you're willing to invest $1200 a year into a software program that is greatly going to help your business, $195 up front is nothing. And honestly, when I was doing poker in bars the first thing bar owners asked me was the up front licensing fee. They expected it. It was a lot easier to sell when I told them there wasn't one, but I could've got them on one if I'd pushed it.

Better yet, just tell them that they only have to pay the fee when they break the relationship, and then they'll never want to leave...

Just kidding.

[Mr. Flopnuts]

Originally Posted by BuckinKaeding

Better yet, just tell them that they only have to pay the fee when they break the relationship, and then they'll never want to leave...

Just kidding.

LOL Definitely throw in a 30 day written cancellation notice into the contract.

[Mile High Mania]

Originally Posted by AustinChief

So far this isn't the case... so far the process is working like this...

Go in possible client's place, try to talk to relevent person, if no go then leave literature, otherwise explain service (takes 10-15 mins max.) and leave with sale (or 2nd meeting which has always lead to sale) or again if not interested yet then leave literature.

So, the process is VERY easy and VERY quick.

Question - are you charging fees for people signing up as reps? Are you charging them for the literature they leave behind?

[AustinChief]

Originally Posted by Mr. Flopnuts

Or better yet, a 1 time "user license fee" of $195 in which you get half and proceed to collect your $20 a month. That is a great solution for start up software companies hiring I-9 salesmen.

I think this is more the route i am going... sortof. Currently the structure is this...

1 time SETUP fee of $100 and $100/month
OR if they sign a 6 month deal we waive the setup fee
OR if they sign 1 year we waive the setup and charge $1000 for the year.

Now for a salesperson I could see

...a 50/50 split on the setup fee +20% ($50+20%=$290/year) ~24%

OR on a 6 month deal they get $125 ($125+$125=$250/year) ~21%

OR on a 12 month deal they get $225 ($225/year) 22.5% (although it is only ~19% of the undiscounted rate)