Question

Topic: Career/Training

Straight Commission

Posted by Anonymous on 8/23/2009 at 10:17 PM ET 125 Points
What is the average for straight commission for a sales manager?

I have been offered a position with a very busy company as a regoinal sales manager. This is a straight commission job, and I have never been paid by straight commission. They asked me what rate I was looking for and I have no idea what to ask for as a rate.

Any help would be greatly appreciated.

Thank you.
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RESPONSES

  • Posted by Chris Blackman on 8/23/2009 at 10:37 PM Accepted
    Averages aren't really useful for much. And do you want to be average anyway?

    It's a bit worrying that a company would ask you to nominate the rate of commission you're seeking. Don't they have standardised rates? What are they paying their other people?

    I think your approach needs to be like this:

    1. You need to figure out how much you need to earn.
    2. Decide how much of the company's products/services you are likely to sell as a worst case (low sales) scenario.
    3. Divide salary by sales to give a percentage rate.
    4. Add an additional percentage for the risk you are taking on by not having a retainer or base salary.

    Hope that helps.
  • Posted by matthewmnex on 8/25/2009 at 8:55 PM Member
    It is tough to talk about percentages when we don't know the product, the selling price and the margins.

    I agree with the first poster,

    Decide first how much you want to earn minimum per year, let's say $200k

    Then tell the employer that you expect to earn 200k minimum but that you would expect to have the opportunity to earn double of that if you sell well.

    (Straight commission sales jobs should only be considered for very high value jobs where earnings potential is unlimited, if they are expecting to get you for 50k per year then forget it, they are not a good employer and they will screw you).

    Then create a tiered commission structure based on target quotas.

    make sure that they show you ACTUAL data of sales over the past 6 months for instance for the territory that you have been offered. Let them show you where they expect to see growth. You can try to estimate based on your experience where you feel you can bring value and eek out more revenue.

    Absolutely be sure that 'expenses' are paid separately. Travel, cell phone wifi connection for your laptop, lunches with clients etc.

    Also very important is that they make a real committment to you and take some risk on their own behalf. Therefore, whenever taking a straight commission job, get the first 3 months commission in advance based on the minimum volume that they expect you to deliver. This is of course recoupable by the company, they can deduct 10% of your monthly commission going forward until they have recouped their advances.

    make sure they understand that this is a good faith commitment, not that you are begging for an advance because you are broke :-)

    Make sure that is is clear in the contract that this is 'advance commission' not a loan.

    On a straight commission job like this, what happens about your health benefits? 401k etc.?

    Make sure that these are paid NON negotiable.

    Good luck.

    Matthew
  • Posted by Frank Hurtte on 8/26/2009 at 7:12 PM Member
    If you come to loggerheads, give me a call. I help people devise commission and compensation plans all the time. I can help.
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