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What to Pay a Salesman

When you own your own business and have a staff of salespeople under you, one of the most difficult questions to answer is what to pay a salesman. Should you follow tradition and pay only commission? If so, how much is fair? Some people offer their salespeople a base salary in conjunction with commission pay. The answer for your company is based on your individual company's characteristics. If there is a good possibility that your salespeople will not make their quota of sales on a regular basis, then you probably should consider offering a base salary as well. You need to review your circumstances, as well as how many salespeople you have on your staff, to find the answer.

When you do your research to figure out what to pay a salesman, you must first figure out how much they can be expected to sell. Take the total dollar amount you expect them to make your company in a one year period and divide that.

The number by which you divide varies, so you also will have to figure out what sort of cut you are willing to give them. If you think your salesman will make your company 0,000 in sales in one year, you have to decide how much of a percentage their efforts are worth. Most companies pay between 35 and 65 percent. This means that the salesman would make anywhere between ,000 and 0,000.

If the number you expect your salesman to make is much higher than that, a lower percentage is used. If you are dealing with salesmen who make companies millions in profit, then the percentage typically is single digits. These all have to be taken into consideration before you can know what to pay a salesman.

Some companies offer salesmen base salaries as well as commission pay.

When this happens, commission typically only kicks in when their sales quota is reached or surpasses. Other companies who want to know what to pay a salesman use these similar formulas but add their own twist. For instance, a company could offer an extremely low base salary and then offer a higher percentage of commission when goals are met. This can be used as a selling point for the company because it ensures their employees that they always will be receiving a paycheck regardless of how the economy is. Many people just staring out in sales look for this payment method because they are unsure whether they constantly will meet their quota.

Because every company is formulated differently, there are many different things to consider when deciding what to pay a salesman. One consideration many companies are forced to make during the economic recession is the economy. They have to ensure that their employees will be able to earn a paycheck, but on the other hand, they have to ensure that they won't lose all their money paying their employees. A good way to figure out a formula is to talk with your business friends who already have systems in place.