Self Employed Sales - fair commission

[Hillary S]

Hi, I'm new to this forum and not sure if I'm typing this in the correct place.

I have an offer from someone who wants me to sell for him. As I used to own my own business in another country emigrating here I have never been a self employed sales agent and I just want to do some research on what is expected on each side. From my side I am expected to fund all of my own expenses, all office, car and fuel and all other expenses, as well as do my own pricing and quoting, invoicing, purchasing and collections and obviously pay my own tax and Ni, etc - so I will basically be running my own business entirely but under his banner. In return he has offered me a third of the profit from all sales. Upon reflection I would think as I am not just out selling, I am going to be spending a lot of time on contacting people, and all the paperwork (not just quoting but purchasing and invoicing) plus all the expenses, I was thinking that 45% of the profit would be a fairer figure but I'm not sure what would be considered reasonable. Is there anyone that can help or guide me towards a suitable and fair commission to negotiate please?

Thank you
Hillary

 

[MBE1]

A lot would depend for myself on the length of the sales process and the size of the market.

For instance if selling a high ticket item such as a yacht you wouldn't expect to sell one each day, but a mainstream product such as a mobile phone contract you would. Some more information might get a better response.

The ticket item/price, expected level of profit, reasonable expectations on number of sales and the length from first contact to payment into your bank account of the commissions, all play a factor.

 

[Hillary S]

Thanks for the reply, its furniture. The level of profit is about 40-45% on average. Not sure of targets yet but I would assume around £20 -25k a month at cost plus 40. Commission would be paid on receipt of payment, anything from a month to 3 months or so.

 

[Ashley_Price]

Hi Hillary, welcome to UKBF

At the end of the day, it's not whether 45% sounds "reasonable", it's whether it covers everything. You need to do some sums, and make sure that the commission you get will realistically cover all your expenses and give you (more than) enough to live on. Then you need to determine if you can realistically earn that level.

I assume you determine your own "patch" as well? If not, check carefully the area they give you, is it going to have enough customers? Remember, people buy furniture and keep it for 3, 5, 10 or more years, so you're unlikely to get too many repeat sales.

I had a friend who went into commission-only sales and while her commission rate was pretty good, the patch they gave her was so small she had no chance of selling enough to get a decent level of income.

 

[Hillary S]

I have been trying to work that out... it could vary quite a bit though. Thank you for the reply!

 

[Ashley_Price]

I know, it's not the easiest thing to work out. Every month can be different, some months will be feast when you're selling with almost every call you make, then others are famine, and you don't sell anything.

 

[Hash and Bash]

I would not go on 'profit' but a percentage of the sales price.
For all you know there is no 'profit' after the seller's expenses & overheads.

 

[Ashley_Price]

I would not go on 'profit' but a percentage of the sales price.
For all you know there is no 'profit' after the seller's expenses & overheads.

Excellent point, and one I should have picked up on.

 

[John Pegram IT Consultant]

A part of my job at the moment as a freelancer is as a Business Development Manager. I get paid a salary every month that's reasonable and 10% of quarterly sales as long as I achieve my target
Really it depends on the size of the projects I bring in and the contract value. For me that is fair enough.

 

[Ryan000001]

The very first question you should be asking yourself is are you suitable for a self-employed sales position currently?

Will you be able to sustain yourself financially while you build your sales pipeline and move through the initial sales cycle?

Do you have an existing network of contacts you can utilise for a faster route to Market?

Are you looking for additional complimentary product/service lines to add to your portfolio which will enable you to up/cross sell and increase your commissions per interaction?

It's very important to realise that the majority of experienced self-employed sales agents come from a long background in a particular industry as an employee before making the decision to work for themselves. They typically have large networks of existing contacts that have been built over the years and create portfolios of product and services which they represent simultaneously.

Has this company had experience working with self-employed sales agents before? Do they understand that you should be out there building your sales portfolio? What are their expectations of you?