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Construction Programs & Results Inc

We Like to See The Good Guys Win!

Pay Salespeople Fairly

by Michael Stone

There are lots of opinions on how to pay a salesperson. But here is the bottom line: your salespeople have to be able to make a good living and provide for their family or your system won't work.

A salesperson needs to pay their bills. In my opinion, today, that means they need to be making at least $4,500 a month. I personally would not hire anyone that did not want to make at least $60,000 year, but maybe I expect a little more of those who would work for me.

Salaries, base plus commission, or any kind of a guaranteed pay gives a salesperson a reason to not sell. Sales is hard work, and working on straight commission gets folks up and to work, and making money. I started selling remodeling in 1969 and with one brief, painful exception, I always worked straight commission. I've turned down countless offers from companies offering work on a salary or base plus commission. that wanted me to work on a salary or a base plus commission. I'm not interested. Because not only does straight commission keep me working, it also means the sky is the limit. And I'll set my own salary, thank you very much.

Straight commission should be based on the sales price of the work and nothing else. Commission based on gross profits doesn't work. The salesperson has no control over the job once it is turned over to production and if something goes wrong in production, the salesperson should not have to pay for those mistakes.

I have talked with many successful contractors whose sales teams do very well not only for themselves but for the company as well. Those selling new homes are paid anywhere from 1% to 3 % of the sales price. Those selling remodeling or restoration work earn 6% to 8%. Specialty salespeople earn 6% to as high as 10%. And they all can earn additional bonuses for such things as zero complaints (from clients, subcontractors or suppliers), generating their own leads, gross profits that exceed a company minimum standard, no change orders, exceeding annual sales goals, etc.

If you treat your sales people right, you'll make far more money than you'll ever save by trying to beat them out of a dollar. If you owe them, pay them. Hold them accountable for all the work they do, but if they do their job correctly, pay them fairly and on straight commission. Then sit back and watch them sell.

Comments

Adam Klein (not verified) /

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