Commission for salesman


#1

Working to reconfigure how our internal process works. We are a bid-type residential roofing contractor running two crews. I’d be interested on how others pay commissioned sales/project managers. This person would take in house leads, sell, order materials, oversee production/completion and collect payments. I would pay the commissions based on gross profit.

Its pretty easy to run the numbers and calculate the appropriate income range. Just looking to see how others may do it.


#2

There are countless ways available. I like at least some portion of the commission to be based upon profit. It encourages the sales rep to not give the roof away. Since you didn’t provide a lot of detail, it is impossible to offer a detailed recommendation.


#3

I have an excel spread sheet that the sales person can feed the measurements in and they can adjust the markup.
Even if they sell at the bottom it protects the sales person and our bottom line.


#4

Great idea. I also use excel although we enter the materials/labor rather than measurements. I would like to use this method on our tablets in the clients driveway. I’ve found it to be cumbersome to adjust/edit boxes in excel via the ipad though.


#5

Authentic_Dad the current scenario is:
I (the owner) act as the only salesman doing all of the estimates. I draw a salary as an employee of the biz. I’ve come to realize that I should have set up myself “performance based”. I am lacking motivation which is definitely effecting our closing ratio. When a client chooses us to do the job, i have a production supervisor that steps in. He schedules [another] site visit with the owners. Collects/signs documents, helps choose colors, and gets acquainted with the project. I create the work order and material list and he oversee’s the production of two 4-5 men crews. He keeps the owners informed along the way, does a final inspection, and delivers the final invoice.This setup has worked good since we have grown into the need for two crews. Previously it was just myself doing the sales/production.

We average about 25-30 leads a week but last months average was 44. I have come to realize that i don’t have any leftover time to effectively do other business related tasks. Its also not possible for me to close more sales due to lack of time.

My dilemma is with keeping sales and production separate or not. If separate, how can i effectively commission the sales and the production side. I would like both to be performance based to some degree.

Markup goal on all job related costs is 40% (labor+burden, overhead %, actual material/dump/permit costs). Average sales price around $8000. Thanks in advance.


#6

capitalroofer, I personally don’t like having a sales guy make a sale and then hand it off to a project manager. That’s just me. My thoughts are that a Sales Person who doesn’t have to handle all aspects of the job is more likely to make promises they can’t keep or over set expectations in order to make the sale. Then let someone else clean up the mess. I’d prefer they clean up their own mess which will teach them more quickly not to make those mistakes in the future.

Why would you commission the production side? I don’t get that one. I view that as a salaried position.

A possible alternative though if you wish to do it that way. Consider each job having so much commission available total. Just for the sake of easy math, say that is 10%. If you want to break it down by sales and production, pay percentages for the different aspects of the job. For example, pay 4% for the sale, 1% each for inspection and adjuster meeting (for insurance jobs), 2% for shingle selection, picking up deposit, ordering materials, 1% for job day project management and 2% for finalizing and picking up the final check. Obviously, the breakdown is up to you. This is a good idea to do anyway in case someone leaves and has jobs on the book. You can pay them the piece of the pie they have completed if they don’t stay around to finish the job.

You could take that same concept and use it with profit split. Let’s say you do a 10/50/50 (10% of the job kept by company for overhead then a 50/50 split of the profits). So you would take the total profits after the job is complete and you cost it out then divvy it out on a ratio based upon your breakdown.

I hope that helps, good luck.


#7

just rent the roofsnap app or pay 10% on the pretax contract amount


#8

We take 5% overhead and then split 50/50 on the net profit. We are always looking for a few good salesmen to manage storm restoration projects in North Dakota.


#9

+1 on the roofsnap app

Vince
http://choiceroofs.com/


#10

5% of total profit??


#11

No you don’t. Nice job trying to find new hires


#12

problem with salesman commission - they will try to sell for as little as possible to get the sale.

If you pay 10% of the job total, and roof “should be” $5000 … let’s say saleman sells it for $4500 … now his commission goes down by “only” $50, where as you (the roofer) lose $500 …

I could never figure out the best way for salemen to keep up prices, to make sure they reflect real costs+profit … so I ended up doing sales myself … just my $0.02

13 years ago, when I worked for a big company, a salesmen sold a metal roof for $38000 … they should have sold it for $58000 .becuase it was all cut up, and sales guy missed about 10 squares :slight_smile: … so nobody made money on that monster, but sales guy got his cuts… hot damn :smiley: