As some others have already stated, commission sales is really
difficult to do on a fair basis, and yet to make sure your
customers are still being serviced in the best possible mannor.
I offer constant input to my sales staff that I will stop this
method at once if I feel any customer is not serviced in the
best possible way.
I offer a three tiered commission, based on gross profit. We
specialize in custom design, and do all manufacturing on premis,
so the variety of goods varies. I pay 1.5% on low margin items
like a class ring, and move to 3% for a standard keystone piece.
I pay out 5% for any piece that is sold above a key and a half,
and it is interesting how my margins have gone up since I started
that. I track sales weekly, and pay commissions monthly.
Yes, I do have some problems with my system, but the benefits
far outweigh the drawbacks. If two sales people work with the
same customer equally, I split the percentage. If I have areas
that are slow to move, I may move an entire department up to the
5% area, and sales pick up almost at once. If we discount older
items to move them out of the cases, I also keep the commissions
at the regular rate, and everyone is happy.
You should realize that whatever you decide to do, that you can
always increase the percentages, but don’t ever try to go the
other way. It won’t help your business to boost sales, and give
it all back in wages. It must be a “win-win” or you are wasting
your time. Good Luck, Mike