Need advice on freelance sales agent fees structure

[mabyland]

Hi all,

We're a new company who sells baby products, such as baby changing bags, baby carriers, soft toys and gist sets.

We are looking for sales agent who are in the nursery industry to help us sell our products to large independent retailers.

As we are a small company, with limited budget, we are thinking of offering commission only sales agents, so we put an advert on british agent review magazine, however for two months, there were no feedback on the post at all? So we tried to use recruitment agencies, and they advise us that it needs to be a base salary plus commission.

Then I come across the term freelance sales agent, which I'm a little confused on how it works, as from my understanding on this so far is that they're not your employee, but instead you sign a contract with their company and they charge you a retainer (which to me is a salary - say £2000 a month), then they will charge expenses and commissions on top of that.

Does any one know a standard fee structure for a sales agent in the nursery industry at all? whether a retainer of £2000 per month + expenses + commissions of 3-4% is average?

I am a little worry about travel expenses, do they dictate what to charge us (i.e. how they travel (first class tickets/taxi all the time, etc))? If so, this could be enormous! I met a person who contacted me, but he isn't local to me, so if we need to meet and discuss strategy and progress, he could potentially charge me a fortune just by invoicing me with his company?!

The other thing is what do I get from this retainer fee? Since he's not a staff, you can't manage him on how he spend his time working for me... so I'm a little uncertain of what this retainer fee covers.

My thoughts are that as sales agents, it is clear that there will be travelling around to their contact retailers and therefore should be included in the retainer fee. Unless I specifically tell him to travel to certain locations, such as trade shows and so on then I am happy to pay for flight and accomodation. But my question is where does the line draw on these circumstances and what is the normal pratice?

Sorry for such a long post, I'm new at finding people like this.... so any advice on the subject would be much appreciated!

Many thanks.

Sheena

 

[captaincloser]

Do not pay a 'retainer'. Sales agents (by definition) do not require retainers. They need a superb commission deal-and a contract to prevent you abusing them on the deal. If they (the sales 'agent') cannot work on that basis they should be in the 'employee' market..they cease to be agents if they are paid for getting out of bed.

Expenses for travel etc you pay (of course) but what 'class' of travel is up for discussion. You need to 'look after' a good agent and cover all reasonable costs incurred in bringing in new business.

Good sales agents are worth their weight in silver at least, bad ones will not hang around...unless, as you mention in your post...you are paying the 'lame-duck' retainer. 'Retainer' in this context is a fudge for 'basic' and those 'AGENTS' asking for retainers are mugging you in every sense of the word.

Just pay excellent commission + receipted, approved expenses... and why wouldn't you ?

Commission agents worth having know what a good deal is and shy away from the myriad of second rate 'commission only' deals offered by underfunded or dubious 'start ups'.

A fact of life and also why many, not you though, moan that they cannot find 'commission only' salespeople/agents...(Quelle surprise !...Of course they can't)

I hope this helps...Best of luck with your new business.

 

[mabyland]

Thanks for the reply. It's very helpful, I shall keep looking for commission only sales agent.

Do you by any chance know where is the best place to find these good sales agents and what is the best way to show them I'm not one of those "dubious" start ups?

 

[WelshAsh]

Hello,

Just thought I'd give my 2c as I've got experience as a sales exec/job-hunter!

As prev mentioned, "commission only" jobs are a dime a dozen, and it's all to easy to skim over these when looking for a new job. If, like me, you have commitments which need to be met, the offer of a commission only job with a firm I've never heard of is not enough to lure me away from a job where I'm already earning decent money.

If I was seriously going to go for one of these jobs, I would look for some form of commitment from the employer, possibly in the form of a guarantee for the first 3 months or so. It wouldn't have to be a huge amount (Maybe £1000 a month?) - just enough to show that the firm has confidence that the product can be sold.

Hope this helps.

Regards,

Ash

 

[oldeagleeye]

Freelance Sales Agent. Commission Only Sales. Just semantics - they are the same breed.

The problem you have Maybyland is recruiting then. In fact I think thatyou have 3 major problems.

1)You are looking for sales agents it seems who are in the nursery industry to help us sell our products to large independent retailers. Why however should a big retailer buy from your small company when they can go direct to the manufacturer. In other word the big player rarely do business with middlemen.

2) Small shops may be an option but having looked at your web site I find your prices up to 80% more expensive than Mothercare. I refer to baby carriers in particular. I am not sure that you could really compete as a wholesaler then.

3 )Even with the high prices I doubt that you could pay enough commision to make it worthwile for a good freelance sales person. A typical employed rep would want the sort of del you mentioned which presumably you are working on the basis of about £30 a year all in. A freelance rep would want at least double that.

Only you can work the numbers out OP but at 10% commission the agent would have to write up about £15,000 worth of business a week. Do you really believe one agent could pull in neally £800,000 a year. If he or she could they would want £200K not 10%. In real terms at least 25% commission and there you have your structure - if you can afford it.

Robert

 

[Billmccallum]

rather than concentrate on what people want, look at what you are willing to offer!

Assuming I found the right web site.... a baby changing bags, carriers & gift sets retail at around £50, toys average £10, small toys & bibs £5, clothes just over £20.

What mark up are you allowing for shops?
What is your minimum price per product?
What is your best offer for commission?

for example...you offer a mark up of 30% (not sure about VAT here, so will work on VAT being payable)

Baby Shower Gift Set - Big £52.71 - VAT = £44.85 retail price

30% mark up = £31.40 sale price

Agents Commission 10% = £3.14 per unit

To make £489 a week (an average wage according to the ONS) the agent has to sell over 155 units a week... change the claculation for products selling for £10 and see the difference.

Now the big problem.... how many companies does the agent represent and do they sell the same products as you?

Then you need to know what the commission rate is with other companies and compete with them or the agent will not have the incentive to market your product.

If you want the agent to work solely for you then you need an employee not an agent.

Having worked on a commission basis in the past, I know how difficult it is to sell to retail outlets, the competition is frantic and everyone wants the best possible price.

 

[MH1]

I agree with captaincloser, self employed agents etc can be found as long as the deal is worth them risking their time and effort, in todays tough economic climate most suppliers and industries struggle to reward the agents well enough.

Best of luck in looking for them, but even employed reps can often not bring in enough new business to justify the investment, look at the figures very carefully before deciding what is your best way forward.

 

[captaincloser]

With regard to your question back to me on where to get a sales agent.
In your position I would go to your potential customers...converse with them ( any that is who are prepared to have the conversation)....You need someone already calling on them....

...With a non competing line(s). This is most unlikely to be a realistic full time position for one agent just representing you. Nothing to stop you having several agents around the country..but for sure in this situation you would be unlikely to get anyone working just for you as a commission agent. As for an 'employee' commission only..forget it for this type of business. Also advertising for agents is hard...a couple of unconvincing websites can be found....maybe a trade magazine but going directly to your potential customer might be your best bet for advice.

Of course the bare knuckle suggestion is that you should be doing this sales stuff YOURSELF. There is nothing more important than sales at this stage for you. You can hide behind all the other aspects of the business as many do but without sales..what was the point of opening the business ? It's a recurrent theme.

You need to rack up those early sales yourself. You are in a fight from the get-go in any sales related business. Go to it.. !

 

[mabyland]

Thanks for all your replies... very useful information, I will certainly look and search around more...

If any of you know any one who is prepared to give it a go with us, please do direct them to me.... Thanks again.

 

[tigerfixings]

Agentbase is a magzine that is mailed out to about 6,000 agents. The way it could possibly work for you is to find an agent or agents who are already selling product into your market. Your products must complement there current product range they sell in order for the relationship to work for you and them. Please do not be tempted to pay a retainer this is good money being spent after bad.

 

[Estel]

Hello,

I have read your comments and I Have decided writing you because I am looking for a sales agent.

I work for a Spanish non profit Institution in the office of London. We help Spanish companies that want to export their products to UK and look for importers, sales agents or what they need in order to sell the good in UK.

One of this companies is really interested in selling leather handbags in UK, so I have to find importers or agents in this country. I would like to know if any of you could help me or if you know any website that I have not already visited where I could find something interesting in this area.

Thank you very much in advanced,

I will follow all your comments, they are strongly useful.

-Estel-

 

[Billmccallum]

Hello,

I have read your comments and I Have decided writing you because I am looking for a sales agent.

I work for a Spanish non profit Institution in the office of London. We help Spanish companies that want to export their products to UK and look for importers, sales agents or what they need in order to sell the good in UK.

One of this companies is really interested in selling leather handbags in UK, so I have to find importers or agents in this country. I would like to know if any of you could help me or if you know any website that I have not already visited where I could find something interesting in this area.

Thank you very much in advanced,

I will follow all your comments, they are strongly useful.

-Estel-

Can you give the name of the institution where you work?

Any contact details?

 

[grantex]

Hi there!

Let me just put this into perspective for you.

Some comments made by others need responding to:

Commission agents worth having know what a good deal is and shy away from the myriad of second rate 'commission only' deals offered by underfunded or dubious 'start ups'.

Only you can work the numbers out OP but at 10% commission the agent would have to write up about £15,000 worth of business a week. Do you really believe one agent could pull in neally £800,000 a year. If he or she could they would want £200K not 10%. In real terms at least 25% commission and there you have your structure - if you can afford it.

Having worked on a commission basis in the past, I know how difficult it is to sell to retail outlets, the competition is frantic and everyone wants the best possible price.

self employed agents etc can be found as long as the deal is worth them risking their time and effort, in todays tough economic climate most suppliers and industries struggle to reward the agents well enough.

Best of luck in looking for them, but even employed reps can often not bring in enough new business to justify the investment, look at the figures very carefully before deciding what is your best way forward.
Of course the bare knuckle suggestion is that you should be doing this sales stuff YOURSELF. There is nothing more important than sales at this stage for you. You can hide behind all the other aspects of the business as many do but without sales..what was the point of opening the business ? It's a recurrent theme.


I have had a look at your website, and what really bothers me is this:

As a hard nosed commercial commission only salesman with over 20 years experience in the nursery goods industry, it appears to me that you think that coming up with a few 'me too' lines you can get someone with years of contacts and knowledge for a few percent commission. In the last 20 years I don't want to even think about the amount of business start ups I could have lost my shirt on because of some 'new mum's' perception of what the market wants.

In truth, if your products are so wonderful and unique, then you should be out there pounding the streets, calling on all the independent and multiple retailers. In reality, if you can't get the sales with your confidence and belief in the business, why should someone else?

Sorry to be so blunt in my first post around here!!

 

[mikeydude]

I run a small business and this is my experience...

1. As a small business one has to be very careful about spending money, so it is almost impossible to pay people a basic and commission it is just too big a "leap of faith"

2. Because of 1 above it is very difficult to get anyone to work for you as most sales people want and easy life!

3. Even if you get commission only agents, they expect you to provide the leads...now call me old fashioned...but that's what you pay sales people to do!!! get leads.

4. Conclusion...unless you are very lucky and go into business with a good sales person you can trust, then the only option and the best option is to do it yourself....once you learn you will be better motivated...you won't bankrupt your business with huge expenses and you will without a doubt be better at it!


Sorry...but it's true.

when you get bigger you can then waste money on sales people!!