Paying a sale representative commission

[pulling wire]

Guys I am looking at buying and selling, only I don't have the expertise or the time to sell anything, so in using the services of a agent or representative please could you advise me on how much commission I would need to pay the agent or representative!

I would be buying and selling in the FMCG market, ultimately I would like to manufacture the product myself so as to gain a better margin, however that decision will be taken in time to come.

I would like the Sales Rep or Agent to get the foot in the door and pay him a percentage of the initial sale to cover his time and cost, I then would take over and the client would deal with me in the future, so basically I require the Rep to acquire new clients.

Please explain to me how a representative in the FMCG industry would have his salary structured, something along the lines of 20% (on invoice value) of the initial sale and 10% for all sales thereafter? I am not wanting to cover vehicle or phone expenses, and pay a commission on top of this. I just want to work on a percentage of invoice value or percentage of profit, and I need to know what percentage that should be.

 

[pulling wire]

You guys are a tough crowd, I would appreciate a little input, none of you sales managers?

 

[spiderz]

aaahh... FMCG = Fast Moving Consumer Goods
Take a look at how any other sales ppl are renumerated.

 

[pulling wire]

I will ask around. Dont really come into touch with any sales folk. Guess i could just get hold of a car salesman or estate agent.

 

[spiderz]

I will ask around. Dont really come into touch with any sales folk. Guess i could just get hold of a car salesman or estate agent.

Google is you friend...do a bit on online research...
but with sales ppl, small basic (if at all), and offer decent commission. That way they have to sell to make their money.

 

[pulling wire]

Google is you friend...do a bit on online research...
but with sales ppl, small basic (if at all), and offer decent commission. That way they have to sell to make their money.

I have an agent woring for me and I have instructed him to focus on new business only, he only has to get the first order and then I handle it further, for this he is asking for 20% on every invoice that I bill to that client. I have offered him 7.5% and he has declined. So I am back to square one. I thought that was a reasonable offer.

 

[Billy]

I have an agent woring for me and I have instructed him to focus on new business only, he only has to get the first order and then I handle it further, for this he is asking for 20% on every invoice that I bill to that client. I have offered him 7.5% and he has declined. So I am back to square one. I thought that was a reasonable offer.

10% is the minimum. Ask him what he expects and negotiate from there.

 

[Other Pineapple Smurf]

I have an agent woring for me and I have instructed him to focus on new business only, he only has to get the first order and then I handle it further, for this he is asking for 20% on every invoice that I bill to that client. I have offered him 7.5% and he has declined. So I am back to square one. I thought that was a reasonable offer.

There is no canned answer as its all got to do with how marketable your product is. An easily marketable product can justify a lower fee/commission as it requires less of the sales guys time and skill to sell. A product that is hard to market or a product that your a marketing to an over saturated market require more time and effort from the sales guy and thus a higher fee/commission.

Also if your sales guy is demanding a cut on every subsequent invoice then he is acting as a rep and needs to take on the support duties of the rep. Don't forget with the new consumer act you need to factor in ballooning into your invoicing and you need to handle refunds.

So if your product was Hannon cosmetics, I would have settled for 1% with the high volume and easy marketing of the product as its just order taking, but if its the next killer Cola product, I think 30% is more in order with the constant marketing, sales follow up, etc.

 

[pulling wire]

There is no canned answer as its all got to do with how marketable your product is. An easily marketable product can justify a lower fee/commission as it requires less of the sales guys time and skill to sell. A product that is hard to market or a product that your a marketing to an over saturated market require more time and effort from the sales guy and thus a higher fee/commission.

Also if your sales guy is demanding a cut on every subsequent invoice then he is acting as a rep and needs to take on the support duties of the rep. Don't forget with the new consumer act you need to factor in ballooning into your invoicing and you need to handle refunds.

So if your product was Hannon cosmetics, I would have settled for 1% with the high volume and easy marketing of the product as its just order taking, but if its the next killer Cola product, I think 30% is more in order with the constant marketing, sales follow up, etc.

Thanks for you advice. My product would be direct competition to Simba and Willards etc, I would say relatively easy to sell once people have tried the product. It sounds like a healthy alternative, however its just as unhealthy as Simba and Willards products, however at my local Spar the competitors products seem to fly off the shelves, particularly during the weekend.

I am not following you on the ballooning factor?

 

[Other Pineapple Smurf]

Thanks for you advice. My product would be direct competition to Simba and Willards etc, I would say relatively easy to sell once people have tried the product. It sounds like a healthy alternative, however its just as unhealthy as Simba and Willards products, however at my local Spar the competitors products seem to fly off the shelves, particularly during the weekend.

I am not following you on the ballooning factor?

Ballooning is a practice that companies like P&G do with Clicks. They add in a few extra items in the box and the store must use these extra ones to handle returns. So if you know that for every 100 packs of crisps you give to your local Spar, they return 10 packs (for whatever reason), you then give them 110 packs and no longer accepts returns.
Its actually an incentive for the store to look after the stock. After P&G did it with Clicks, the stores became more responsible with the stock and saw a financial reward for doing so.
Also cuts out a lot of admin at both the client and you. But its not something you can force onto your client, you can offer it as an option. Works only with bigger clients though.

 

[Psycho Pitbull]

Here's my 2c worth:
I work as a Sales Rep in the security industry, and I get paid 10% commission (no basic only commission) from the total price of the quotation that I supply the customer (assuming that the customer accepts the quote, if not, I get buggerall. ).

 

[pulling wire]

Here's my 2c worth:
I work as a Sales Rep in the security industry, and I get paid 10% commission (no basic only commission) from the total price of the quotation that I supply the customer (assuming that the customer accepts the quote, if not, I get buggerall. ).

Tough job you got. You must have balls of steel.

 

[pulling wire]

Ballooning is a practice that companies like P&G do with Clicks. They add in a few extra items in the box and the store must use these extra ones to handle returns. So if you know that for every 100 packs of crisps you give to your local Spar, they return 10 packs (for whatever reason), you then give them 110 packs and no longer accepts returns.
Its actually an incentive for the store to look after the stock. After P&G did it with Clicks, the stores became more responsible with the stock and saw a financial reward for doing so.
Also cuts out a lot of admin at both the client and you. But its not something you can force onto your client, you can offer it as an option. Works only with bigger clients though.

Thanks for the explanation, makes sense. My product has no preservatives, hoping for smaller more regular orders, so as the product does not expire on the shelf, should be manageable.