What to pay sales guy

Discussion in 'Employment' started by daleyslawn, Feb 24, 2009.

  1. daleyslawn

    daleyslawn LawnSite Member
    Messages: 12

    Im looking to hire a sales guy but what is the going rate? A friend of mine wants the job but i think he asking to much he want $12 an hour plus like 5% commision but i told him that way to much. I was thinking like 8 or 10 an hour and like 3-5% commision what does everybody think?
  2. Gold Star Lawns

    Gold Star Lawns LawnSite Member
    from Indiana
    Messages: 89

    The company I work for has offered me to do sales for about 12 weeks(part-time). I have the choice. I can either take my hourly rate + 3% or4%(can't remember exact), or I can just take straight comission which is 12%. I am obviously gonna take the straight comission. Hope this helps a bit
  3. milsaps118

    milsaps118 LawnSite Senior Member
    Messages: 565

    I'm hiring a sales guy this year for the first time too. I'm only paying a percentage off gross monthly sales he/she brings in. If they don't sell anything I don't pay anything. Gives that person more incentive to close deals and he/she gets to have total control of what they want to make.

    I'm not putting this person on my payroll though, I'm paying them as a subcontractor. I think it will work out good for both of us. They can become their own "business" as a LLC/Corp, and I don't have to carry all the burden of what's associated with having an employee on my payroll.

    This is my first time doing this so I couldn't tell ya how good this works...
  4. EgansCountryGardens

    EgansCountryGardens LawnSite Member
    Male, from Plymouth, MA
    Messages: 165

    I have a salesperson on staff paid commission. Here is a piece of advice. Pay the salesperson a percentage of profit on the job. Not a percentage of the selling price. Fpr example, paying the salesperson 25% of the PROFIT, might work out the same as paying 3 - 4% of the total job. This makes the salesperson accountable for the job as it is in progress too. Hell if I could get paid a percentage of the selling price of a job, I'd be a salesman. You could lowball everyone to get the jobs, and you still get paid whether the company makes money or not.

    This is also a good incentive for the salesperson to find jobs that the company can make a higher profit margin on too, because he will also make more money. It also gives him incentive to follow the job through and make sure that it is run efficiently and to the best of its profitability because that's money in his pocket.

    Just make sure that when you figure profit, you figure your overhead which should include a salary for yourself in it and any administrative people that you might have employed. The profit should only be the profit the company makes, not yourself. You should get paid regardless on any job.
  5. PROCUT1

    PROCUT1 LawnSite Platinum Member
    from TN
    Messages: 4,891

    This is good advice.

    I would pay 100% commission.

    Make it good though. And make it doable. You want him out there hammering.

    Paying a salary or hourly plus commission in my opinion wont attract the best salespeople.
  6. big acres

    big acres LawnSite Member
    Messages: 182

    that allows you, the business owner to determine what your "profit" is. It is totally arbitary. What if production mismanages the job and labor... is that your sales guys fault? Percentage of gross is the fair way, as long as his average profit margin is within industry standards, that is fair to the owner too... give him a bonus if he exceeds it.
  7. EgansCountryGardens

    EgansCountryGardens LawnSite Member
    Male, from Plymouth, MA
    Messages: 165

    How does that allow me to determine what my profit is? The only thing thats going to determine my actual profit is the result of production. We typically estimate the jobs working of of a 28% profit margin. However you never know what is actually going to happen until the job is done. Percentage of gross is NOT a fair way. Who is it fair to? The salesguy that can lowball a job just to get it so that he may make a commision. The one person it is not fair to is me, the owner. The salesguy is involoved in production from the begining till the end of the job, therefore it would be his fault if there is a problem.:hammerhead:
  8. LawncareAmericaLLC

    LawncareAmericaLLC LawnSite Senior Member
    Messages: 616

    I have Two sales guys out there and this is my first year doing this. I worked it out like this: I give first cutting off any residential lawn they pick-up. 10% for any commercial accounts they pick-up. Any landscaping they pick-up i give 20%. Now both of these guys work on the lawn crew so not only will they get the first cut but also get payed there normal pay. They seemed to like that idea and in the long run i save money on crappy leads or people who dont want to pay. No lost on my side only gains.
  9. big acres

    big acres LawnSite Member
    Messages: 182

    True, he could lowball to get the job, but if you are reviewing his overall performance his jobs should average about what your margin is or better. If not, then you have the discussion and adjust commsissions if needed.

    Secondly, Landscape and GM sales are totally different IMO. I am not a foreman, and no matter how many visits I make to a site, I will not catch every innefficiency, which under your plan would cost me money. Before you insert the hammerhead icon, consider that it really depends on how you structure your sales force. We have systems in place so that once I sell a gm account and get them going, I can walk away and drop by a few times per season. Production is responsible from there on. At the end of the season, we review if they have been hitting my numbers.

    Are they sending to big or too small of a crew?
    Are they sending the right equipment?
    Does the labor understand the objective?

    These are things for which I am not responsible, but they can directly take food off my table. So, how do you asure your sales guys that they aren't getting shortchanged by production... which has hiccups with labor, weather, and plenty of things?

    I can assure you that my boss will make an adjustment to our commission if we are underbidding on a regular basis and it makes our average margin fall below guidelines.
  10. tatmkr

    tatmkr LawnSite Member
    Messages: 61

    I did sales for severla yers and I know what my compensation package was and I have recieved literally dozens of offers from other companies, so here is my take on this:
    -First my compensation for 3 companies was $35-38,000 per year plus 3% of the sales price. I also did several other jobs including building fireplaces, grills, h20 and such, marketing, snow removal, equipment repairs, and ran my own jobsites.
    -We had a sales guy that worked on a lower base and a higher commission and he did lowball jobs and gave us problems (which when that happens your usually in pretty deep before you even see the initial damage). To correct this issue the owners set the pricing startegy (overhead, hourly rate, fuel, ect.) They also reviewed every price before it went out the door. This doesn't take more than 20 minutes or so and sets your mind at ease.
    -As part of my salary, which I am sure some of you are flabbergasted at, I was held accountable if a job was unprofitable. This is a based on the reason the job failed. If I underestimated the site conditions or materials then I lose out on the commission. If the crew was just unefficient then I stilll get what I deserve.
    -Speakly with absolute conviction, if your sales guy also has to manage his jobsites you will NEVER obtain their full sales potential.

    I can keep going on and on, but here is my suggestion:

    -$20,000 base salary (just a hair shy of $10 per hour)
    -3-4% commission on construction sales
    -2-3% commission on maintenance, snow removal, commercial (lower margians)
    -Commission payed monthly on completed and paid in full production
    -Commission prorated or forfieted for jobs under x% profit if fault is found in the sale itself
    - Set sales goal for the year (don't use yourself as a base, owners will always be able to sell more than a salesperson, because people like to deal with an owner)
    - All quotes will be reviewed before leaving the office (if fild estimates are needed then set pricing guidlines shall be in place)

Share This Page