Big News: FounderDating is joining OneVest to build the largest community for entrepreneurs. Details here
Latest Notifications
You have no recent recommendations.
Name
Title
 
MiniBio
FOLLOW
Title
 Followers
FOLLOW TOPIC

Question goes here

1,300 Followers

  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur

What is a recommended payment method for independent sales people?

In the case of tech startups selling online products and services, if you were to have independent sales people,
what is the recommended payment method, is it a % of sales, if that what would be the recommended %

25 Replies

Rob Gropper
0
0
Rob Gropper Entrepreneur
Director at PetHero, SPC - Member at Eastside Incubator - Principal at Tuxedo Technologies Group
% of sales is common, but this varies widely depending on what you are selling, to whom you are selling, the skill set needed, etc. The are a few threads on FD on this topic already you should look at.
Anton Yakovlev
0
0
Anton Yakovlev Entrepreneur
Founder of four successful businesses on two continents who can help you do the same
It depends greatly on what exactly and to whom you are selling. You cannot just use one % rate for everything.
Richard Harris
0
0
Richard Harris Entrepreneur • Advisor
Top 25 Inside Sales Leader, Public Speaker, 40 Most Inspiring Leader, Sales Trainer, Start-Up Advisor, SalesHacker
It's been my experience that a good sales person does not want to be "independent" for a start-up. Part of working for a start-up, especially at early stages is the equity play.

I am happy to be proven wrong but that's just been my experience.

Mark West
1
0
Mark West Entrepreneur
Creative technologist and entrepreneur, building regulatory compliance software for gaming
As mentioned earlier there are resources that answer this question available. Do your research.

One thing I would highly recommend is that whatever amount you decide to pay, pay it on invoice receipt and not on sale. Your sales people need to be engaged to ensure that the client pays, not just "promises to pay." By tying the commission payment to receivables you (the company) share the risk with the sales person of future non-payment.
Richard Harris
2
0
Richard Harris Entrepreneur • Advisor
Top 25 Inside Sales Leader, Public Speaker, 40 Most Inspiring Leader, Sales Trainer, Start-Up Advisor, SalesHacker
I'd disagree with Mark on collections.

In an early stage start-up perhaps, but sales people are not bill collectors. There is a reason you would not have your accountant sell to your clients just like you should not expect a sales person to collect money.

Again early stage start-ups is all hands on deck so I get the sentiment and the risk.

If the issue is you have clients who do not pay your bills, then you are selling to the wrong people and need to adjust your ICP (Ideal Customer Profile)
Valera Kushnir
0
1
Valera Kushnir Entrepreneur
UI/UX - Client Relationship Manager at Dabble Lab: early stage product development, mobile apps and start ups.
Any time you have sales reps, especially independent reps, you are looking at commission based compensation. It's like bread and butter of any sales field.
Generally, 10% is a very solid commission. You might have to up that based on your product, and what it takes to earn a sale.
Based on personal experience, pharmaceutical and surgical sales rep for companies such as Covidien and Ethicon are compensated at 8-12%.

Steve Everhard
0
0
Steve Everhard Advisor
All Things Startup
I agree with Rob but I would also add that the value of the sale affects commission, as does the typical gestation of the sale - if it's a large ticket and takes a year to close for instance, as opposed to a commodity price and an instant buy. It also depends whether yours is an accessory or a prime purchase. It can be as effective to commission sales people on margin if the product allows, as opposed to volume - especially if they have the opportunity to discount to deliver business.
Michael O'Malley
0
0
Michael O'Malley Entrepreneur
Board Member at domestic violence crisis center
% is a variable based on the industry and experience of the rep.. Payment terms are a variable based on whats good for you and the payment history of your industry. I say , pay your rep. when you get paid.
Rob Edenzon
6
0
Rob Edenzon Entrepreneur
Acting Vice President, Sales at Armorway Inc.
I am not a fan of commission only reps for start-ups. I've been a commission only rep. My % has ranged from 10% to 40%.

But you can't expect an independent rep to cold call or tap their network and magically sell something. They need lead gen, collateral, a sales process, an analysis of the market to focus on that is low hanging fruit.

You need to provide any rep, on payroll or not, the tools they need to be successful with your product or service.
Sara Hammes
3
0
Sara Hammes Advisor
Leading Companies into New and Emerging Markets
Thanks Rob! Completely agree. A go to market strategy for a company has to include a holistic effort. A BD person will not be successful without the right support. this translates to lack of success for the company as a whole. Relying solely on sales to meet all of your goals is an insufficient strategy.
Join FounderDating to participate in the discussion
Nothing gets posted to LinkedIn and your information will not be shared.

Just a few more details please.

DO: Start a discussion, share a resource, or ask a question related to entrepreneurship.
DON'T: Post about prohibited topics such as recruiting, cofounder wanted, check out my product
or feedback on the FD site (you can send this to us directly info@founderdating.com).
See the Community Code of Conduct for more details.

Title

Give your question or discussion topic a great title, make it catchy and succinct.

Details

Make sure what you're about to say is specific and relevant - you'll get better responses.

Topics

Tag your discussion so you get more relevant responses.

Question goes here

1,300 Followers

  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
Know someone who should answer this question? Enter their email below
Stay current and follow these discussion topics?