How are commissions on sales usually determined?

Quixote1818

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Tue Dec-13-05 03:38 PM
Original message

How are commissions on sales usually determined?

Is their basic way they are determined and is it usually consistent regardless of the business?

I know some Reps get to split the profits with the company. For instance if a Rep. makes $100,000 in sales and the companies costs are $40,000 then the company gets $30,000 and the Rep gets $30,000.

I have a friend who is a Rep. for a book company and he gets only 10% of the sales but the mark up is very low so the distribution company is probably only making 10% as well.

Is a 50/50 split between the Rep. and the company after costs are taken out the norm?

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ET Awful

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Tue Dec-13-05 03:40 PM
Response to Original message

1. There is no "norm" really.

It varies from company to company and product to product, and primarily industry to industry.

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Quixote1818

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Tue Dec-13-05 03:46 PM
Response to Reply #1

2. Would you have some examples of what different Reps make?

I am just trying to see if my Boss is being fair or not.

He is going to pay 10% before proffits are taken out which seems like a rip off to me. It's a photography business. So for example if I sign $100,000 worth of business, all it get is $10,000. I know his costs are only around 40% so that means he makes $50,000 and I make $10,000. Does that sound fair to you?

What do you think would be a fair commission?

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ET Awful

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Tue Dec-13-05 03:50 PM
Response to Reply #2

3. I can't say for sure, but that's not THAT unusual in my experience.

Edited on Tue Dec-13-05 03:50 PM by ET Awful

I'm not an expert by any means.

It is his business, he did make the initial investment to get it started, he does have overhead (apart from the actual costs of that particular job, he also has to worry about rental of the premises, taxes (payroll taxes, sales, etc.), benefits (if you have health insurance, etc.).

That's not THAT unusual of a split.

I can't say whether it's "fair" or not, but it's certainly not unusual.

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Quixote1818

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Tue Dec-13-05 03:56 PM
Response to Reply #3

5. What about if he doesn't have to service the accounts at all?

When I sign an account, I take the photos, do the PR, fix problems etc. All he does is collect money off all my work. His lab prints the photos but thats all he has to do with anything.

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ET Awful

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Tue Dec-13-05 04:02 PM
Response to Reply #5

7. Like I said, I'm no expert, but . . .

as unfair as it may seem, it is his business, he is entitled to make money.

Is he paying you salary plus commission? If he's also paying you salary, you have to take that into account as well.

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Midlodemocrat

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Tue Dec-13-05 03:52 PM
Response to Original message

4. Depends.

Some commissions are a percentage of the sale, others are a flat fee. Still other commissions are based upon whether or not it is a new customer or repeat business.

Additionally, some employers pay commissions differently based on the 'product' sold.

Unfortunately, there really isn't a standard. However, you might be able to determine a standard in your particular industry by doing a little research.

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Quixote1818

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Tue Dec-13-05 04:00 PM
Response to Reply #4

6. I did do some research

Another photography company out of Missouri that does exactly what we do splits the profits 50/50 with the Reps. How can I bring that up with out pissing off my boss and making him feel like a cheep skate?

In this business the owner of the company has very little to do with the clients I sign. I sign the business, shoot the photos, handle the problems and do the PR. His lab prints the packages but he mostly just collects the money I make for him. It doesn't seem fair to me now that I know what other companies pay their employees.

Any thoughts?

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Midlodemocrat

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Tue Dec-13-05 04:05 PM
Response to Reply #6

8. I didn't mean to imply that you hadn't done your research.

I am a professional researcher and finding out information like this is how I spend my days.

Try salary.com or yahoo finance and see if you can obtain the new of a company that is a competitor to you that is public. The salary/bonus information of the top five earners will be on yahoo and then you can go to the reuters site to obtain option information.

If however, this is a small shop that you are referring to, you might have to make some discreet inquiries from local competition.

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Quixote1818

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Tue Dec-13-05 04:06 PM
Response to Reply #8

9. Thanks for that. nt

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