% Commission %

Discussion in 'Landscape Architecture and Design' started by tthomass, Feb 15, 2007.

  1. tthomass

    tthomass LawnSite Gold Member
    from N. VA
    Posts: 3,497

    What is fair commission for employees?

    Examples:

    Referrals through an employee
    &
    Employee goes out and brings in the sale

    Standard, based on 2 companies I know of......appears to be 3%. I have someone working for me that has brought some useful referrals and I want to also get this person into sales. Not only will they make more money but it brings in more money for the company.........duh.

    Now, sometimes 3% just seems low. A $1,000 job would be $30 for the sale. I was thinking of setting a sale minimum commission of $50 and warrant a minimum sale of $1,000. Commission of $50 or 3% whichever is larger.
     
  2. Alps Lawn

    Alps Lawn LawnSite Member
    Posts: 8

    that sounds good... better than what I get which is nothing lol
     
  3. PaperCutter

    PaperCutter LawnSite Bronze Member
    Posts: 1,955

    Are you talking about installs or maintenance? When I was selling installs, I made 7%, 10% if I managed the project- but I was on straight commission, doing nothing but sales. Somewhere in that range seemed the norm in NoVA when I was interviewing a couple years ago. Not sure how you'd compensate a crew member. If it's just a referral, what you suggest totally makes sense.If they're doing everything from first contact through signing the deal, I think that's worth more than 3%, especially if it's on top of their regular duties. Maintenance, I have no clue.

    If you're moving your guy to sales, just make sure you have the crews to build what he sells. Part of why I was so glad to leave my old situation is that the client loved me right up until I had to explain why we had to install their project three months later than we discussed when they signed the contract.
     
  4. tthomass

    tthomass LawnSite Gold Member
    from N. VA
    Posts: 3,497

    Commission is just extra income. He will be staying a crew member as do I. I work all day and sell, pay bills and do estimates all night. Drink a Dr. Pepper and do it all again the following day.

    We only do installs, no maint.

    He is currently paid a salary on a $14hr wage.
     
  5. tthomass

    tthomass LawnSite Gold Member
    from N. VA
    Posts: 3,497

    Yes I agree on the sale part. If I don't have to do anything but look over the proposal to say yes, all bases are covered. Sure, its worth more than 3% to me.
     
  6. PaperCutter

    PaperCutter LawnSite Bronze Member
    Posts: 1,955

    Just don't forget, no one will be as passionate about your business as you are for the hours you put in and the money you get out. My brother forgets that, which is one of the reasons why he is now a client, not a boss :)

    Is your guy doing design work, or is it more just selling smaller projects?
     
  7. tthomass

    tthomass LawnSite Gold Member
    from N. VA
    Posts: 3,497

    His current duties are more like right hand man and learning the industry. He's personable and could have a conversation with a shovel......good talker. This is something that can be used to help him and the company make more money.

    I wish my brother would work for me.........we're not even 2yrs apart and think alike. The "passionate" part would be filled. Damn computers taking people inside!
     
  8. D Felix

    D Felix LawnSite Bronze Member
    Posts: 1,898

    So what exactly are you envisioning him doing to get the commission?

    Simply referring the client to you and you then contact, design and sell the job, or will he get the OK from you then design and sell it?
     
  9. tthomass

    tthomass LawnSite Gold Member
    from N. VA
    Posts: 3,497

    Both depending on the situation. Sales you don't just start one day and know it so for a while I will be very involved. Then if he can do it himself I won't need to be there holding the customers hand. He may be able to go out and sell a privacy screening etc but a patio would require more of my input. So there you have it, an example of both referral and sale.

    So what I'm looking for is ideas for commission on:
    #1 Referrals............I do the majority of the work.
    #2 Sale..................I OK the work.
     
  10. PaperCutter

    PaperCutter LawnSite Bronze Member
    Posts: 1,955

    Great logo, by the way. Where in NoVA are you located?

    Like I said, a flat, simple way to handle referrals makes the most sense. If the employee is simply providing a (hopefully) qualified lead and you're doing the rest, then in my mind that's worth $50 at most unless you're talking about a really good-sized project.

    As to the sales part of it, where you ok the work- I think that if all you're doing is looking it over and saying ok, and he has other paid duties within the company, 5-7% is fair. From the way it sounds, I get the sense he's a key employee, so I don't know as that I would offer additional percentages for "running" the job, since he's probably already doing that as part of his paid responsibilities.

    If you're looking to kind of train him into this capacity, then obviously a reduced rate during the ramping up period makes sense. I'd just spell it out very explicitly what the rate is and what the expectations are he has to meet to get bumped up. If he's as valuble as you say, no point in risking hurt feelings over a stupid mismatch of expectations.

    I don't understand how family businesses do it. After we split, it took 5 months for my brother and I to start talking again. Never again!
     

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