Commission only employment

kleefarr

I would be interested in any possible feed back with regard to this, both positive and negative, as I am currently contemplating making available job offers for commission only sales.

Just a bit of background info for you, I have my own business, I am trying to manage sales on my own but have thought that we would achieve greater coverage by obviously expanding our sales force. However, the business doesn't make the amount of money at present to be able to offer full or part-time salaried positions, hench the commission only idea.

I would be very interested and grateful for any thoughts or suggestions you may have, whether they are good or bad. (As long as they are constructive)

Maybe someone has had some experience of this before?
What would be considered a fair commission? 50%, 60% 70%?
Hours of work?

Thanks,

Kevin.

(oh, I have already OKed this with WWM. He said he was looking forward to a good laugh.) :rolleyes:

damnyanks

I've only worked in sales once (Selling software solutions). One thing that I've seen / been told is to try to avoid jobs that pay commision only.

I was given different reasons X,Y,Z. But it would depend on the product really and level of commision being offered.

The potential employee would have to be made aware of how likely sales opportunities arise as at the end of the day it may be their only source of income.

WhiteWashMan

kleefarr wrote:

(oh, I have already OKed this with WWM. He said he was looking forward to a good laugh.) :rolleyes:

actually, i velieve what i said was i would be interested to see what came up because i am in sales.

please dont annoy me by telling lies about me.

kleefarr wrote:

I would be interested in any possible feed back with regard to this, both positive and negative, as I am currently contemplating making available job offers for commission only sales.

it would be helpful if you mentioned what sort of sales it is.

i dont think anyone is going to work on a commission basis for a low margin commodity product.

lomb

you would have to pay people the going rate labour wise, ie a skilled employee needs to make 40 grand anyway+car @30 cent a mile. if ur business wont generate this for someone forget it, it wont work. if it has potential, u can invest the money and hopefully make a profit, tell me what the product is, would make it easier.

abccormac

I once worked a commision only job, and left, along with most other people who started the same day as me, at lunch time on the first day. Positives for you are that you can hire everybody who applies, negatives are if they don't think they'll make much money they will leave straight away.

I believe the employee the national minimum wage per week
€7 * 40 hours = €280
if they don't make their commision.

kleefarr

WhiteWashMan wrote:

actually, i velieve what i said was i would be interested to see what came up because i am in sales.

please dont annoy me by telling lies about me.

Sorry. That was my poor attempt at humour. I apologise.

WhiteWashMan wrote:

it would be helpful if you mentioned what sort of sales it is.

Computers/laptops/hardware

kleefarr

Papa Smut wrote:

I believe the employee the national minimum wage per week
€7 * 40 hours = €280
if they don't make their commision.

You mean I would have to pay minimum wage even before I paid commission?

Even if it stated in a contract and terms of employment..

commission only 75%
hours to suit (flexitime/part-time).

Maybe a self employed type contract would be an option. This would allow working times and effort to be governed by the person themselves, without the threat of having to pay someone for not pulling their weight.

Thanks all for the input so far.

nesf

I've done commission only sales. It's tough. Even when you have a good commission on the things you are selling and are making enough off each sale for it to be worth your while, you WILL have barren patches, especially if what you are selling is expensive and not small and people will impulse purchase it.

Selling computers...

Ok no one is going to make full time money from this on a weekly basis. Yes they might be able to sell enough computers in the year to cover a decent wage, i think it works out at 2 computers a week sold last time I was looking at that industry.

2 computers a week does not sound much, but I can guarantee that with big players like Dell in the market these days it will be very tough to achieve. You are basically looking at focussing on either the individual sales market (ie home owners) and this is completely irregular sales without an easily accessable and well advertised point of sale (ie a website, preferably a store, ie more costs and less commission). Or you go down the contract route to companies or schools/whatever, where you are shifting 5-20 computers at a time, this again is irregular and you need a good point of sales and a reputation to back it. Either way this isn't something that you can just drop a person into since you won't have a steady influx of customers for them to learn how to sell with.

Basically you need an experienced sales person, and an experienced sales person isn't going to work for commission only unless they are desperate or doing it in their spare time, or the commission is insanly good.

Maybe a student might be able to make some cash on the side from it, but they'd have to be a good salesperson to shift enough computers to make it worth their while. Considering the marketing muscle already in the market, they would have an uphill struggle selling anything that didn't already have an established brand.

Dell and co, have a very good brand going in this country, if you are planning on selling on products that have no brand presence in this country, then you are going to have trouble selling to people who aren't aufait with the products and the market, ie normal people. While more technical people won't be swayed by a sales person if they aren't offering a good product at a good price. If it's a good price, then it's not going to have a high markup and thusly not have a good commission, then it needs a high volume of sales, and then can't be done effectively on a part time basis.

Can you see what I mean?

The_Conductor

The following link will give you details about the minimum wage:
http://www.entemp.ie/publications/employment/2004/minimumwage.pdf

You will have to pay the minimum wage- i.e. regardless of whether they are working under contract or not, if they fail to meet the minimum wage on a weekly basis, the onus will be on you as an employer to top-up their salaries to minimum wage (retention) levels.

If you ring the employment helpline on 1890 220 222 (Enterprise, Trade and Employment) they will be able to go into the details with you.

Shane

nesf

smccarrick wrote:

The following link will give you details about the minimum wage:
http://www.entemp.ie/publications/employment/2004/minimumwage.pdf

You will have to pay the minimum wage- i.e. regardless of whether they are working under contract or not, if they fail to meet the minimum wage on a weekly basis, the onus will be on you as an employer to top-up their salaries to minimum wage (retention) levels.

If you ring the employment helpline on 1890 220 222 (Enterprise, Trade and Employment) they will be able to go into the details with you.

Shane

He can get around this by not having the person as a employee.

What happens is, the person is self employed, and is contracted by his company to carry out sales at the above renumeration.

This gets around the whole minimum wage thing. It is how some of the major door-door sales companies work iirc.

It also means that the company doesn't have to worry about the guys taxes, doesn't have to pay PRSI on his behalf and other assorted advantages. Also the person has no rights as an employee, ie holidays etc.

It can be a really nasty way to run a business from what I've seen.

JackieChan

hmm if you were offering 75% commision on a sale, how could you make money on the sale unless the consumer was been shafted on price.
So for instance if I saw a motherboard on komplett for 100eur
So if you were to charge the same price, I would get 75eur and you would get 25eur!!

Personally I'd be interested in such a scheme, but only on a part time basis.
It's hard to see too many people taking it on full time unless the product practically sells itself!

JC

nesf

JackieChan wrote:

hmm if you were offering 75% commision on a sale, how could you make money on the sale unless the consumer was been shafted on price.
So for instance if I saw a motherboard on komplett for 100eur
So if you were to charge the same price, I would get 75eur and you would get 25eur!!

Personally I'd be interested in such a scheme, but only on a part time basis.
It's hard to see too many people taking it on full time unless the product practically sells itself!

JC

He'd be giving 75% of the profit, not the price.

Otherwise he'd be losing money, obviously.

JackieChan

...that makes sense!...I just associated commission with a % of sale price!

nesf

JackieChan wrote:

...that makes sense!...I just associated commission with a % of sale price!

Yeah, some companies calculate your commission as a percentage of the sale price if they don't want you to know what their mark-up actually is. That said some companies do calculate commission in this way and don't hide their mark-up. It's not uncommon for someone to get a 1-2% commission as a perk ontop of their salary to encourage them to sell more (although generally this would be for managers).

Generally you can take higher numbers as refering to a fraction of the profits, and smaller ones as a fraction of the sales price. Not always though, on some high profit items, you might be only given 10% or so, and still be pulling in over 50K a year off little work.

The_Conductor

Re Commission:

Trying to compete against the likes of Dell in the marketplace is bloody difficult- I tried for a 4-5 year period and threw in the towel (was working locally, and had a full-time day job. Am registered as an integrator with most of the UK suppliers- so was able to get hardware wholesale. I was unable to build even low spec systems for the prices Dell were advertising. Irrespective of the relative merits of the product you are selling, people only tend to look at the bottom line. I do not envisage a large volume of sales from your proposed commission only staff, hence I would imagine that you would be forced to pay commission at the higher end of the scale- 60-75% levels......

Whether or not you are employing these people, and irrespective of the remuneration method- there are tax implications. Private contractors have to submit their own tax returns and pay their tax by a certain date (correct me if I'm wrong, but a preliminary return must be done by July of each year in advance- and the person would have to estimate their annual income, and reconcile the difference in their final return). Alternatively as an employee- you have social insurance contributions, PAYE etc. (and with new red tape must supply a pension option and lots of other stuff).

Its a minefield- consult a professional who knows what they are talking about.

Ps- would also advise having a look at the Fixed term employment act 2004, it may be relevant given your possible employment ideas.......

garyskeepers

@kleefarr just came across this thread..

how did you get on?

jimmycrackcorm

Died 12 years ago