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Thursday, July 24, 2014

Question

If utilizing sales personnel, what kind of percentage is given for work or per contract obtained?


Answer

From the ICAN/ATEX archives, here are some suggestions:

Sales compensation typically includes a combination of base salary, plus performance-based incentive (commission), plus expense account and a car.
Salary to Commission Ratios range from:
• 0-50% salary + 100-50% commission
Salary ranges, as written in ATEX before, are dependent on local market rates.
Variables Adjusting the Above:
• Salesperson experienced/new in the cleaning industry
• Size of local market (# of opportunities & average job size)
• Aggressiveness of cleaning firm’s pricing (where is their pricing relative to their market?)
• Does the salesperson develop pricing, or does Operations?
Commission plans for Contracts vary from:
• 1-time payment of: 100% Monthly Gross Profit, or 20% of Monthly Billing Amount
-or-
• 4-quarterly payments of: Sliding % based on Gross Profit Margin. The higher the Margin, the higher the % commission
Commission plans for Project-based (TAG) work:
• 1-time payment on receipt of customer payment
• Sliding percentage based on actual Profit
• Profit=40-75%, Pay 5% of total billing
• Profit=76-99%, Pay 10% of total billing
• Profit>=100%, Pay 15% of total billing

Chris Arlen
President, Service Performance
Ph. 206-780-2963 | Fax: 206-780-2448 | www.serviceperformance.com