What commission would you pay...

Discussion in 'Business Operations' started by DiscoDave, Jul 10, 2010.

  1. DiscoDave

    DiscoDave LawnSite Member
    from Midwest
    Posts: 196

    What % commission would you pay a contract sales and marketing company that...

    1. Agrees to a non-compete agreement.

    2. Generates their own leads and closes the sale based on your pricing requirements.

    3. Works out of their office.

    4. Provides their own transportation AND expenses.

    5. Will allow all sales to be verified and confirmed before you agree to payment.

    What are your thoughts?
     
  2. santafe

    santafe LawnSite Member
    Posts: 191

    I'd say 10%. most realestate is 5-7%. Auctioneers for on site is 10 -17%. I mention them because I'd say the work would be the same. But it is really just a guess.
     
  3. domain311

    domain311 LawnSite Member
    Posts: 177

    Maintenance I would guess maybe 5-7% and planting or general installations 10-12%.
     
  4. trimmasters

    trimmasters LawnSite Senior Member
    Posts: 261

    For spray accounts 20%, maby more. I'm interested, Who is this company?
     
  5. DiscoDave

    DiscoDave LawnSite Member
    from Midwest
    Posts: 196

    Thank you to those who have answered so far.

    Keep in mind, most green industry companies average 10% on advertising and marketing. Also, if they employ a sales person, they are paying a salary (that does not go away when the leads are not coming in), employer share of taxes and workers comp., perhaps benefits, vehicle expenses, plus a varying commission of 7% to 15%.

    On the other hand, independent sales contractors work 100% on commission, generate their own leads (this reduces advertising costs significantly), covers own transportation expenses, there are no employment taxes, workers comp. or benefits to pay and they are self managed (fewer employee issues to deal with). You can terminate their services with a clear conscience and no unemployment claim when you reach your sales goal, slow down or feel as though they are not performing.

    I was thinking...
    10% to 12% for mowing.
    10% to 15% for landscape maintenance.
    20% to 25% for lawn care and tree and shrub programs.
    10% to 15% for most other services (drainage systems, enhancements and other addons.

    What do you think?
     
  6. lawnangel1

    lawnangel1 LawnSite Senior Member
    from KY
    Posts: 601

    Where do I sign up?
     
  7. trimmasters

    trimmasters LawnSite Senior Member
    Posts: 261

    Can you start Monday? I would go for it. What part of Ohio are you in? it would be nice to pass the overhead of the sales team on to another company knowing you have a fixed cost for sales of 20% or so. how do you plan on having your team generate leads? Telemarketing, Door to door, Etc?
     
  8. DiscoDave

    DiscoDave LawnSite Member
    from Midwest
    Posts: 196

    The company does not exist... yet. I am employed by another company at this time. However, I am a former lawn and landscape company owner and can't seem to kick the entrepreneurial spirit. I am considering starting a company that specializes in business development for the green industry.

    Presently, I have sold over $600,000.00 in 2010 maintenance services for the company I work for and am not being compensated to my satisfaction. Also, I have to manage the division and would prefer to focus soley on sales and marketing (which is my niche and passion). I am confident, I would have approached or exceeded $1,000,000.00 in sales this year if I weren't't bogged down with managing production as well. I generated 70% (estimated) of my own leads. The other 30% were the result of advertising the company invested in as well as existing/previous customers requesting quotes for additional services.

    I have an eye for developing original and creative marketing and advertising strategies that work. Plus... I am one hell of a salesman. :) Therefore, when I do this, I am willing to be 100% responsible for generating my own leads. The challenge I am having is gauging the level of interest/need for a service such as this. Also, trying to determine the market value has been daunting as well. The more I charge (%), the more I can invest in lead generation which (of course) results in more sales. However, the more I charge, the less attractive the service becomes.

    I am curious to see your response.
     
  9. lawnangel1

    lawnangel1 LawnSite Senior Member
    from KY
    Posts: 601

    I would hire you at the above percentage rates you already talked about, but like you said you would have to sign a non compete. But I think you could make a lot of money for yourself starting a development biz like this.
     
  10. wbw

    wbw LawnSite Fanatic
    Posts: 5,454

    I service swimming pools. I would gladly and I mean gladly pay 1 months gross for a maintenance account. If I could spread the payment out so that the customer actually payed for it as I went I would go as high as 3 months gross.
     

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