I have a question about our Sales Commissions. We are a hardware reseller that also installs and supports the end users with equipment purchased through us. Our sales commissions are calculated this way: Profit - COG (15%) = Sales amount x commission (10%). So, a $1000 dollar sale by the agent, has approx. $450 in Profit to the company. Then they take out 15% for what management calls 'COG' = $67.50 = $382.50 x 10% commission payout = $38.25. So an agent makes a $1000 sale, and receives $38.25, does this sound correct, the way in which they are applying the COG and commission amounts? I am new to the sales side of the house, and was a bit surprised. Does this look familiar or standard?

I cannot address hardware sales directly however for most commissioned salespeople they receive on average 33.3% of the net profit for each sale.

Stringer

Never did hardware, I have sold steam cleaners and pressure washers and all of the chemicals and items that go with them.

And that is very low commission to what we were doing.

Is here a salary on top of that commissio,

Quote:

---

Originally Posted by Stringer

I cannot address hardware sales directly however for most commissioned salespeople they receive on average 33.3% of the net profit for each sale.

Stringer

---

Thanks Stringer. I guess I was also wondering if the COG calculation is really legit. I do have a salary, so I am not starving. But to take an additional 15% for cost of goods seems a bit tricky, considering the house is getting 90% of the profit. Is that normal?

Quote:

---

Originally Posted by tyrrellica

Thanks Stringer. I guess I was also wondering if the COG calculation is really legit. I do have a salary, so I am not starving. But to take an additional 15% for cost of goods seems a bit tricky, considering the house is getting 90% of the profit. Is that normal?

---

When a salesperson receives a salary (possibly expenses also) the commission percentage and how it is calculated is sometimes negotiated. The larger the salary generally the smaller the commission.

Stringer

Quote:

---

Originally Posted by Stringer

When a salesperson receives a salary (possibly expenses also) the commission percentage and how it is calculated is sometimes negotiated. The larger the salary generally the smaller the commission.

Stringer

---

Thanks, understood.
I was under the impression that COG calculations were for the business financials, and not in the calculation of commissions. So in this example, I am getting the 10% after they take an additional 15% off the profit - I was told this is to pay accounting, keep the lights on, etc. I figured the company was using the 90% of profit for these expenses. Essentially, the sales staff is paying for 'housekeeping' out of their commissions. Does that make sense, or is that standard in a sales commission scheme? Thanks for your help!

It's all in the bookkeepingTyr.

If they create a category for a column say for 'Admin' for example they could put all those expense items in it and then arrive at a 'net' profit' which would then have commission paid on this bottom line figure.

Stringer

Quote:

---

Originally Posted by Stringer

It's all in the bookkeepingTyr.

If they create a category for a column say for 'Admin' for example they could put all those expense items in it and then arrive at a 'net' profit' which would then have commission paid on this bottom line figure.

Stringer

---

Got it. Somehow, I still feel cheated!
You have been great, thank you for your responses.

Quote:

---

Originally Posted by tyrrellica

Got it. Somehow, I still feel cheated!
You have been great, thank you for your responses.

---

You're very welcome, good luck and now go sell something... :) Nothing happens until a sale is made. Noting produced, nothing shipped, nothing resold, noting bought, nothing used...

Sales are our life blood...