How do I fairly and effectively compensate an independant salesperson?
March 8, 2010
I recently started a small web design & development that caters to a very specific blue-collar industry niche. One thing I am considering doing is bringing onboard an independant sales rep to drive sales, since like many tech gurus, I’m more comfortable with programming than I am selling. Since the salesperson would be independant, they would be compensated via comission only.
The upfront web design package will be priced at around $3,100, with an additional montly fee of about $300. The monthly fee pays both for hosting, site maintaince, and an Internet marketing and advertising campaign. These are largely cookie-cutter sites designed using highly refined templates. This ought to reduce the sales cycle a bit (and hopefully make them easier to sell?) What percentage of each sale should I offer the sales rep? So I or shouldn’t I offer him/her a percentage of the monthly fees as well? If so, how long do I continue to pay the rep a cut of that monthly fee? Thanks!
Filed under: Financial Services
4 Comments Leave a Comment
1.
accesscard | March 9, 2010 at 3:42 pm
Not understanding your financial model I would pay him 1/3 first yr margin than 10% each yr. after if they are in contact to keep the client. Nothing after they leave you.
2.
i1patrick | March 12, 2010 at 5:51 am
Discuss with the sales person what he/she thinks is fair. You may have much more or much less in mind than them in terms of what amount would be fair compensation. Market value is in the neighborhood of 15% for each initial sale, but you need to work that out together.
(I would not generally offer more than a token 5% on the monthly fees and then only for the first year…since that is what you will need to have as income to grow your business).
3.
Quality Seamless | March 13, 2010 at 1:03 pm
I would give at max 20-30% for sale and maybe 10% monthly for the fees.
4.
book_allie | March 15, 2010 at 9:20 am
I would recommend a flat fee per sale. However, if you want to have an incentive for your seller, you might set target ranges, where if they sell more than X number of pages on a given pay cycle (2 weeks?), then you can pay more per sale. If you weren’t charging so much for the initial package, I’d suggest something like $20.
Alternatively, you could try selling a page yourself to determine how long it takes. Let’s say it takes you 4 hours to sell a page. You would multiply 4 hours times minimum wage.
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