Commission on electrical work

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MBLES

Senior Member
is there a sales commission rate for new work to a shop from sales person or master of shop. some shops dont have their master and have master of record. i know everyone is different, so what would be the rate if there is one? any ideas? or advise?
 

petersonra

Senior Member
Location
Northern illinois
Occupation
engineer
My guess would be whatever you can work out with the guy footing the bill.

I knew some salesmen that were on commission for a remodeling contractor that got 35%. Hit rate pretty low, but lots of TV and newspaper support.

Some former siding salesmen I have run into have claimed similar numbers.
 

MBLES

Senior Member
My guess would be whatever you can work out with the guy footing the bill.

I knew some salesmen that were on commission for a remodeling contractor that got 35%. Hit rate pretty low, but lots of TV and newspaper support.

Some former siding salesmen I have run into have claimed similar numbers.


I am asking for advise. I have opportunity to be master of record for shop. i also can bring some customers. i was wondering how much of a
percentage above salary would be the norm. I am not going to hold someone to it I am just looking for best advise. i know in the end i will have to make the bed i lie in.
 

petersonra

Senior Member
Location
Northern illinois
Occupation
engineer
I am asking for advise. I have opportunity to be master of record for shop. i also can bring some customers. i was wondering how much of a
percentage above salary would be the norm. I am not going to hold someone to it I am just looking for best advise. i know in the end i will have to make the bed i lie in.

A lot depends on the quality of the business you bring in and the net margin of that business. If you are bringing in mostly low margin business, you should not expect to get much in the way of commission, if any at all.

It also matters how much of your time is spent on bringing in this business. If you spend half your time on it, and you cost $100,000 a year, you will have to bring in $50,000 of net margin just for your new employer to break even on the deal. people often dramatically underestimate how much it costs to bring in new business.
 

MBLES

Senior Member
A lot depends on the quality of the business you bring in and the net margin of that business. If you are bringing in mostly low margin business, you should not expect to get much in the way of commission, if any at all.

It also matters how much of your time is spent on bringing in this business. If you spend half your time on it, and you cost $100,000 a year, you will have to bring in $50,000 of net margin just for your new employer to break even on the deal. people often dramatically underestimate how much it costs to bring in new business.

i undestand. this question is just for show. ..if i make 75k but i drum up 200k of business. what would you say i could hopefully ask for in commission? remember. i will be master of record and work also. i wont just be sitting at shop.
 

petersonra

Senior Member
Location
Northern illinois
Occupation
engineer
i undestand. this question is just for show. ..if i make 75k but i drum up 200k of business. what would you say i could hopefully ask for in commission? remember. i will be master of record and work also. i wont just be sitting at shop.

How much of the $200k is net margin?

If they are paying you $75k, you are probably costing them over $100k by the time you figure in overhead, fringes, expenses, etc. Lets call it $100k.

Suppose 1/3 of your time is spent drumming up business. Just that time costs the company $33k. You have to have $33k of net margin in that $200k just for the company to break even. If you do not know what your net margin is, there is no way to tell you what the extra business is worth. My guess is there won't be a lot of extra net margin after they pay for you to drum up the business. Maybe it is worth 5% to them. Probably not a lot more.

The thing is if you bring in $200k worth of new business, and it takes 1/3 of your time, and there is only 15% margin in the new business, the company has lost money on the deal. The company breaks even at 16.5% margin. If they give you an additional 5% commission they have to have over 20% margin just to break even. A lot of work does not have 20% margin in it these days.
 

MBLES

Senior Member
How much of the $200k is net margin?

If they are paying you $75k, you are probably costing them over $100k by the time you figure in overhead, fringes, expenses, etc. Lets call it $100k.

Suppose 1/3 of your time is spent drumming up business. Just that time costs the company $33k. You have to have $33k of net margin in that $200k just for the company to break even. If you do not know what your net margin is, there is no way to tell you what the extra business is worth. My guess is there won't be a lot of extra net margin after they pay for you to drum up the business. Maybe it is worth 5% to them. Probably not a lot more.

The thing is if you bring in $200k worth of new business, and it takes 1/3 of your time, and there is only 15% margin in the new business, the company has lost money on the deal. The company breaks even at 16.5% margin. If they give you an additional 5% commission they have to have over 20% margin just to break even. A lot of work does not have 20% margin in it these days.
an

i see what your saying. if im not getting nothing out of it them ill just pass up new business , as long as my check still clears ill keep working. Thanks for Advise.
 
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