I’m considering expanding our business and hiring a salesman. I’ve got someone in mind but I’m not sure what to pay him. I know it varies greatly per location, but what are some other CEPro’s paying their sales staff? I am planning to start him off on commission only but I’m not sure what percentage of the sale is average for our industry. Any insight, ideas, or suggestions?

Thanks everyone!

If you want the person to stick around, you will need to give them a base or draw. It will typicaly take 90-120 days to start earning a living on commish. Some where between 5-8 % of the job profit is good for commish

Tx Jack

While I do agree that a base is common I would point out that with unemployment where it is currently the cards are stacked in favor of the employer.  You are likely to find sales people who would be willing to work off purely commission if given a product/service that they can sell with good margins.

As an example:  pick a category for your services and build a package for the sales person to pitch.  Make it a $3500 home theater package, plus installation.  Then let them sell it for $3750 and they get to keep the $250.  Your business gets what it needs and they now have the building blocks for earning some decent cash.  They’ll even likely start helping you add packages and upsell options.

Great question… May I offer some, “out of the box, ” thinking to your answer:

1. What is the salesperson’s marital status? If single, he/she can fly without a net. If married, he/she will be more apt/driven to stick around, do a better job, and less apt not use you as a stepping stone if a better opportunity arises providing you pay he/she fairly.

2. Does he/she have any experience? The answer to this question can be 2 fold;
A. If he/she has no experience, than you don’t have to take the time to, “unlearn, ” he/she of whatever bad habits have been already learned/ taught by another dealer. Great salespeople are never taught… they are born with a natural talent for the job.
B. If he/she does have experience, than you have to decide how much they actually know, (products & players in the business), and pay them accordingly.

3. A, “commission only,” basis for pay will only put more pressure on yourself. If you are not doing your job to bring people into your store, you can’t expect results from he/she when there are no tools in place for he/she to work with to make a living. Thus, you are in effect creating a partnership/agreement from day one for both of you to give 100% towards a common goal.

Personally, I’m well known for overpaying my sales & installation staff regarding industry standards. I do this to prevent theft, distention within the ranks, and to dissuade he/she from ever doing side jobs behind the company’s back for their own personal financial gain. A happy crew is a loyal crew. That’s probably why my staff can not only be fully trusted, but also they have been with me for decades.

Bottom line, IMO, it’s impossible to put a dollar figure, (whether it be hourly or a commission percentage),
on what someone is worth until I see the entire package in action.

My first job in the AV industry was in sales in 2001.  I was in Arizona, was 24 years old,  and newly married if that helps in any way.  That package got me to stay there over 5 years, so no turn and burn.  I left only to run a region for another company, and actually went back to my original employer 18 months later.  As I was making more as a Sales rep, than I did as a Regional Branch Manager for another firm.

My package way back in 2001 was a $40k base and 3% commission on billed revenues (not profits).  I had no AV experience, but was employed at IBM when I got the job, so I was not technically challenged.

IMO, you have to base commission on profit.  The revenues plan is easy, as you can track that better, but it gives no incentive for a rep to be accurate in the small pieces, assuring that you actually make money on each and every job.  Tracking profit means true job costing, but at the end of the day that will help your business in every possible way, regardless of the sales rep’s plan.

If you don’t decide to offer a base, a draw would definitely be necessary for a serious candidate.  The lowest I was offered as a draw in a commission only plan was $3k per month for 180 days, but the rate of commission was extremely high, given that was the only income potential.

Morgan is right in that if you have a structured offering for good better best retro theater etc, a per sale rep can be had at the $250 and up range he stated.  Usually college age take this sort of thing.  Hire them from ADT or from the white panel van that stops at the gas station and asks you if you “want to buy some audiophile speakers on the cheap, because the warehouse misread the invoice and gave them 8 pairs instead of 8 speakers.”  These reps don’t shy away from approaching people, but typically sell other items as well, (I had one move from AV to Security to Exterminating with one knock at my door), and aren’t known for their longevity.  As Dave stated, you will want to watch your cash and inventory, and will probably lose them to the next guy for an extra 10 bucks per sale.

Best of luck and God Bless

Mark C

Great question, here is my 2 cents on Christmas morning. 

As an average in Ohio 15% of profit and 8-10% of labor.
A salesman selling 40K a month 32k product and 8k labor would make about $2600 month.
If I were going to hire a salesman I would consider offering warranty packages, I sold them
successfully for years at retail, then when I started my own business I somehow stopped selling them.
At a 20% commission should make another $400 or so a month there writing policies at a 5% clip.

I personally would provide a draw on commission, either long term or for 90 days.  I want my people to
be strong salespeople, but 100% commission is too much pressure for most people. 

Training program, You need to have it on paper, organized, and ready to go on his first day.  His first
two weeks should be similar to a plebe at West Point.  It will gain you much respect. 

Last but not least find someone who is a good “fit”.  Someone who mirrors your ideals.  If you are a get
the deal at all costs, stretch the truth if you have to guy, hire someone like you.  If you are a straight up
dude, then hire another straight up dude.  This guy is YOU in the community!  Make sure you have a
person who can represent what you are about. 

Now what are YOU gonna do to support him?
What groups are you ACTIVELY participating in?
Where do you advertise on a SEMI-REGULAR basis?

Because if my math is close, he just brought in nearly 15K that your company did not have previously and
putting it all your pocket would be your right, but would not be great for long term growth or the relationship.