“Shaun, I am part of a three person consulting start-up and we are ready to hire our first sales person. I have run the numbers and I can’t afford a base salary, so what do you recommend for a commission percentage for hiring a straight commission rep?” Frank Caliendo
Frank, assuming you aren’t the impressions comedian, because if you were, your agent would be your sales person and they are already on 100% commission. One of the many challenges of being a three person consulting firm, is that I assume you are responsible for b
oth selling and delivering the engagements. Also, unless you are working on very high margins, I agree that with only three consultants you will have trouble supporting a full-time base salary sales person and if he/she is any good they will get you to 80 billable hours a week in 120 days.
My only qualifying question is what is your business plan in regards to number of consultants? If you want to grow to 15 consultants in the relatively near future, I would reconsider investing in a base plus commission full-time sales person.
Below are my answers, comments, plus two additional ideas for you.
For 100% commission sales people, I recommend 30% to 50% commission rate on the margin in your deals. Assuming you bill by the hour, set up a cost base hourly rate, then the margin will be above the rate. If you do the fixed bid project this will be more complicated, however I am confident you can work out a formula. A comment, on the pros and cons of 100% Commissionable reps. The pros of straight commission sales are the obvious with the low initial cost and they only get paid when they sell. Be aware of the cons of lack of control and depending on your industry how hard it will be to get quality candidates.
Additional ideas:
Work out a deal with business partners to market your services. Who do you call on? Who is your buyer? Find a company that also sells to your prospects and work out a deal for them to refer, resell, or bundle your services.
Do the three of you have an office assistant? You could hire an office assistant, who can also make 50 prospecting calls a day. This person can work on getting you and your partners appointments. You could even hire someone right out of college and develop them both as a sales person and potential consultant. Check out my posts on prospecting calls:
http://closerq.blogspot.com/search/label/Prospecting%20Calls
‘Good Hiring', Reader Feedback, please click the comments below to give ‘Frank' additional recommendations and I want your feedback on my response, Shaun Priest at shaun@closerq.com.
Frank, assuming you aren’t the impressions comedian, because if you were, your agent would be your sales person and they are already on 100% commission. One of the many challenges of being a three person consulting firm, is that I assume you are responsible for b
oth selling and delivering the engagements. Also, unless you are working on very high margins, I agree that with only three consultants you will have trouble supporting a full-time base salary sales person and if he/she is any good they will get you to 80 billable hours a week in 120 days.My only qualifying question is what is your business plan in regards to number of consultants? If you want to grow to 15 consultants in the relatively near future, I would reconsider investing in a base plus commission full-time sales person.
Below are my answers, comments, plus two additional ideas for you.
For 100% commission sales people, I recommend 30% to 50% commission rate on the margin in your deals. Assuming you bill by the hour, set up a cost base hourly rate, then the margin will be above the rate. If you do the fixed bid project this will be more complicated, however I am confident you can work out a formula. A comment, on the pros and cons of 100% Commissionable reps. The pros of straight commission sales are the obvious with the low initial cost and they only get paid when they sell. Be aware of the cons of lack of control and depending on your industry how hard it will be to get quality candidates.
Additional ideas:
Work out a deal with business partners to market your services. Who do you call on? Who is your buyer? Find a company that also sells to your prospects and work out a deal for them to refer, resell, or bundle your services.
Do the three of you have an office assistant? You could hire an office assistant, who can also make 50 prospecting calls a day. This person can work on getting you and your partners appointments. You could even hire someone right out of college and develop them both as a sales person and potential consultant. Check out my posts on prospecting calls:
http://closerq.blogspot.com/search/label/Prospecting%20Calls
‘Good Hiring', Reader Feedback, please click the comments below to give ‘Frank' additional recommendations and I want your feedback on my response, Shaun Priest at shaun@closerq.com.
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