I was at an auction once and talked with a shop owner that asked me if I had a salesman. He said he hired a salesman at a percentage to bring work into his shop and his business really took off. If anyone is doing the same, what percentage would you expect to pay the salesperson?
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Hiring a salesman
- Thread starter Bluechipx
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dkmc
Diamond
- Joined
- Jan 13, 2002
A better question is, what percentage would the salesman expect you to pay. Explored this avenue many years ago. Most of them wanted 10% on every sale including repeat orders. That seemed to be the starting point. Others wanted 10% plus a small salary to cover costs. Oh, and YOU provide the transportation and fuel. Will they be an employee or strictly commission? That can get tricky with state employment requirements. My experience with talking with a few of them is they wanted to make $100k per year, and expected to see a row of late model 'name brand' CNC machines in your shop. That signals their potential to achieve their salary goals. Small shop with older machines? Fagitaboutit
michiganbuck
Diamond
- Joined
- Jun 28, 2012
- Location
- Mt Clemens, Michigan 48035
QT: (Most of them wanted 10% on every sale including repeat orders.)
I heard of 2 to 2 1/2 % was a norn for a salesperson in your employ.
!0% plus wages, soon the salesperson would own the company.
I heard of 2 to 2 1/2 % was a norn for a salesperson in your employ.
!0% plus wages, soon the salesperson would own the company.
dkmc
Diamond
- Joined
- Jan 13, 2002
10% for independent sales reps that are not formal employees.
Edit: I never could make the numbers work at that rate....not enough left to make it worth doing.
Last edited:
chad883
Cast Iron
- Joined
- Jan 12, 2012
- Location
- indiana, usa
So the salesman would get paid for 10% of material cost and tooling cost? Just trying to figure out what the norm would be. Would you quote the job like normal and add 10% to cover the commission?
It's a long standing tradition...hire a salesman because you need more work. You realize that it's well worth 10% (or whatever) off any work to pay him. So you hire him, he brings in the work, then you do two things:
1) You instantly fuck up the production so he loses face with the customer. The commitment you made when he was fighting for the the order? Well.....
2) You instantly begin to begrudge him his pay and begin to think of justifications of why you have every reason to cut his pay. The above example of 'repeat business' is a perfect one.
People are inherently ignorant when it comes to any facet of life they aren't personally engaged in. In terms of business and production? There is a very simple fact - no one cuts a single chip or ships a single widget until someone else has taken an order for it. The creation of work is what the salesman brings to the table....and it's a huge part of the battle. Over my years in sales, it's stunning how many times I've heard some jamoke deep within the factory cry, 'Why did we take an order like this...?' As if there is a big bowl of orders that we dip our hands into to choose from.....
There are lots and lots of people who have CNC mills....the reason YOUR CNC mill is cutting chips is someone got someone else to place an order.
If I ran a production company, I'd want my salesman to be living on a yacht and driving a fancy car and eating at Delmonico's every day....as long as he kept my shop at 99% capacity.
1) You instantly fuck up the production so he loses face with the customer. The commitment you made when he was fighting for the the order? Well.....
2) You instantly begin to begrudge him his pay and begin to think of justifications of why you have every reason to cut his pay. The above example of 'repeat business' is a perfect one.
People are inherently ignorant when it comes to any facet of life they aren't personally engaged in. In terms of business and production? There is a very simple fact - no one cuts a single chip or ships a single widget until someone else has taken an order for it. The creation of work is what the salesman brings to the table....and it's a huge part of the battle. Over my years in sales, it's stunning how many times I've heard some jamoke deep within the factory cry, 'Why did we take an order like this...?' As if there is a big bowl of orders that we dip our hands into to choose from.....
There are lots and lots of people who have CNC mills....the reason YOUR CNC mill is cutting chips is someone got someone else to place an order.
If I ran a production company, I'd want my salesman to be living on a yacht and driving a fancy car and eating at Delmonico's every day....as long as he kept my shop at 99% capacity.
dkmc
Diamond
- Joined
- Jan 13, 2002
Sales would get 10% of the invoice. Yes, add the 10% only to hear you are 12% higher than the awarded bid.
cg285
Stainless
- Joined
- Jan 31, 2007
- Location
- sumterville, fl
although machining is part of my business it is not 100% so my experience may be a little different
however sales people almost bankrupted me
however sales people almost bankrupted me
With my purchaser hat on, most of the hired machine shop "salesmen" I've dealt with were worse than useless. They generally didn't know much and just got in the way, playing telephone between me and the person who actually had the answer to my question. The good sales guys for machine shops were the ones who had been at the company in another capacity and then went into sales. They knew what their company could and couldn't do.
With my business owner hat on, it seems like the big disadvantage of commissioned sales reps paid a % of revenue would be that their incentive is to bring in business, regardless of how profitable it is. How do companies deal with this? If you're selling widgets, there's presumably a price list, but with machining, there's a lot of guesstimating as to what my cost will be.
With my business owner hat on, it seems like the big disadvantage of commissioned sales reps paid a % of revenue would be that their incentive is to bring in business, regardless of how profitable it is. How do companies deal with this? If you're selling widgets, there's presumably a price list, but with machining, there's a lot of guesstimating as to what my cost will be.
Booze Daily
Titanium
- Joined
- Sep 18, 2015
- Location
- Ohio
I’ve had two types of outside sales. Two were sales companies. One sold tooling and consumables and would pick up RFQs from maintenance and engineering depts looking for short run stuff.
The other sales company was just a guy moonlighting for extra cash.
For both of these I would quote to them, they would mark it up and quote the customer. If I got the order the PO came from them, I shipped to them and they paid me.
The other sales rep was a semi retired guy working for himself. He would send an RFQ and I would quote to him. He reviewed it before submitting it and advise on my price. Usually I was too low.
I get it up where he liked it and he would submit my quote directly to the customer.
If they ordered, they ordered directly from me.
I would send him a copy of the PO and when I shipped I sent him a copy of the invoice.
When the customer paid I cut a check to the sales guy. This took trust on his part.
On repeat jobs the customer would order from me and I kept him in the loop. I think I paid him 6%.
I got dozens of customers from him.
The other sales company was just a guy moonlighting for extra cash.
For both of these I would quote to them, they would mark it up and quote the customer. If I got the order the PO came from them, I shipped to them and they paid me.
The other sales rep was a semi retired guy working for himself. He would send an RFQ and I would quote to him. He reviewed it before submitting it and advise on my price. Usually I was too low.
I get it up where he liked it and he would submit my quote directly to the customer.
If they ordered, they ordered directly from me.
I would send him a copy of the PO and when I shipped I sent him a copy of the invoice.
When the customer paid I cut a check to the sales guy. This took trust on his part.
On repeat jobs the customer would order from me and I kept him in the loop. I think I paid him 6%.
I got dozens of customers from him.
sealark37
Stainless
- Joined
- Mar 24, 2010
- Location
- Davidson NC USA
You would be better served by hiring an employee to do all or part of your daily tasks, and hit the road yourself to find more business. No salesman knows more about your shop's capabilities, or will work as hard as you will.
Without details, this is meaningless. If you were almost bankrupted by sales people, you hired the wrong people and/or failed to manage them. Sales people, by and large, have no authority to make agreements on your behalf.
Laverda
Cast Iron
- Joined
- Mar 24, 2014
- Location
- Riverside County, CA
My experience is they can make your life hell if you allow the salesman to do the quote. Their incentive is to get work for your shop at prices you can't make any profit on.
A shop I knew near me went out of business because of this. The salesman got a big order from a very large company. Hurray says everyone and the champagne corks start popping after the contracts were signed. Once the owner starts looking at material and labor costs he realizes the quote will bankrupt him. He tries to either renegotiate the price or cancel the order. Customer says we have a signed contract and you need to deliver the parts at the price in the contract. So he ends up getting sued and months later I see a sign on the building that there will be an auction of all the equipment.
A shop I knew near me went out of business because of this. The salesman got a big order from a very large company. Hurray says everyone and the champagne corks start popping after the contracts were signed. Once the owner starts looking at material and labor costs he realizes the quote will bankrupt him. He tries to either renegotiate the price or cancel the order. Customer says we have a signed contract and you need to deliver the parts at the price in the contract. So he ends up getting sued and months later I see a sign on the building that there will be an auction of all the equipment.
No company in it's right mind would let a salesman establish pricing....that's the job of the commercial manager/owner. It's no different than blaming a forklift driver for spearing one of his co-workers to death after you tossed him a dime bag and told him it was OK to get stoned at lunch. There's no excuse for poor management.
dkmc
Diamond
- Joined
- Jan 13, 2002
That makes no sense. The higher the price the job, the higher their commission is.
I wonder how often that happens. If he could prove the price is so low it will bankrupt him, how could he be expected to continue on anyway unless the customer invested funds in material or tooling and stood to loose money. We need more specific details.
The way it works is a salesman realizes (between rounds of golf and sleeping with his boss's wife and his boss's wife's younger sister) that making 8% commission on a $90K sales is much more money than 8% commission on a $120K sale if you actually sell the $90K job and lose the $120K job.
But again, no one with any brains in the head let's the salesman set the price. He can find out what the customer is willing to pay, and he can tell the boss his recommendation...but the boss ultimately is the one sets, and who lives or dies, by the price.
dkmc
Diamond
- Joined
- Jan 13, 2002
Which has zero relate to Laverda's comment.
Phil in Montana
Stainless
- Joined
- Jul 31, 2007
- Location
- Missoula Mt
Hire the guy that lies the best... thats what everyone else does...
john.k
Diamond
- Joined
- Dec 21, 2012
- Location
- Brisbane Qld Australia
if you own a shop ,sales have to tread a fine line between comission and bribery.......for instance you always get a certain job at way over the going rate ,and it comes via a "salesman" ,who says that competing interests are going to need some cash (folding kind) straight up for the contract to go through.
