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Topic: Opinions on sales rep structure (Read 263 times)

CSAS
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Opinions on sales rep structure
« on: Jul 6^th, 2005, 8:46pm »

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Here are some thoughts going through my head on sales reps and consultants.
Currently I retail and wholesale and what I've been doing for a few, is selling to them wholesale and charging tax, and they have been reselling on their own. They are not actually a business. I do it this way, because I do not want to get into the whole tax situation with consultants. Not sure what it entails as far as reporting consultants as an expense. I have one lady that gets a case every week to 2 weeks and another that has ordered twice since October of 2004. So what I am thinking is to restructure it and instead of wholesaling, selling to them at 35% off the retail price and charging them tax. Also putting a minimum $50.00/order. I was thinking this would deter them from just getting the discount on personal orders and conning me.
Wouldn't that clear me of any extra paperwork as far as taxes are concerned, if I am charging them tax, it would be just like a customer getting a deep discount and what they do with them is their business?
And as far as sales reps to businesses, here are some numbers I jotted down.
This would be for monthly sales, the way I look at it, the more they sell the more they make and that's their incentive to sell more.

Monthly Sales
0-$500.00 8% of sales
$501.00-$1000.00 10% of sales
$1001.00-$1500.00 12% of sales
$1501.00-up 15% of sales

All comments and opinions are welcome. I am kinda confused on what to do in some situations. I also have a lady that wants to purchase to resell and also be a sales rep to retail businesses.

Thanks for helping
Tracy

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Meca
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Posts: 2243

Re: Opinions on sales rep structure
« Reply #1 on: Jul 7^th, 2005, 4:42am »

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on Jul 6^th, 2005, 8:46pm, CSAS wrote:

\\Wouldn't that clear me of any extra paperwork as far as taxes are concerned, if I am charging them tax, it would be just like a customer getting a deep discount and what they do with them is their business?
.

I don't know on this I would get the advice of a tax consultant but I would think so. You are charging them tax so yeah I would think so.

on Jul 6^th, 2005, 8:46pm, CSAS wrote:

\\
Monthly Sales
0-$500.00 8% of sales
$501.00-$1000.00 10% of sales
$1001.00-$1500.00 12% of sales
$1501.00-up 15% of sales

I would think that they would want a higher % because at $1000 they would only make $100 that would make me not want to sell for you because I am doing all the work and just bringing you the orders.

on Jul 6^th, 2005, 8:46pm, CSAS wrote:

\\

All comments and opinions are welcome. I am kinda confused on what to do in some situations. I also have a lady that wants to purchase to resell and also be a sales rep to retail businesses.

Thanks for helping
Tracy

And this lady.. Well I would give her the same price as everyone else. If she wants you to private label them so that she can sell to other business than I would say go for it. But I would think that you would have to have a totally different structure if you are going to do something like this.
I hope this all makes sense!

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Lorrie

EB Candles
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Posts: 6811

Re: Opinions on sales rep structure
« Reply #2 on: Jul 7^th, 2005, 8:42am »

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I have two people that sell for me. I give them both 25% of the sales. Doesnt matter how much they sell.

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CSAS
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Posts: 166

Re: Opinions on sales rep structure
« Reply #3 on: Jul 7^th, 2005, 1:35pm »

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They sell wholesale for you?

So do these numbers sound right.

Just an example:
If it cost $2.00 to make a candle
You wholesale it for $4.00
Your profit is $2.00
Your sales rep gets 25%, so they get $1.00
That means your profit is now $1.00 per candle.

See, I'm just not getting the part, where we make money. That's why this is so frustrating. If you raise your wholesale price, then the stores raise their retail price and then customers do not want to pay that much.

I'm soooo confuuuuussed!! Huh

Thank everyone for helping me figure this out.

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EB Candles
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Posts: 6811

Re: Opinions on sales rep structure
« Reply #4 on: Jul 7^th, 2005, 1:52pm »

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on Jul 7^th, 2005, 1:35pm, CSAS wrote:

No, thats not the way I figure my cost. I take my cost and triple it for wholesale. Take the wholesale price and double it for retail.

So, using your example...

2.00 x 3 = 6.00 wholesale price
6.00 x 2 = 12.00 retail price

Rep takes 25% of the 12.00 = 3.00
Your profit = 9.00-2.00 = 7.00

Dont go giving your reps a % off your wholesale price. You will never make any money that way!

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Melly
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Posts: 818

Re: Opinions on sales rep structure
« Reply #5 on: Jul 7^th, 2005, 1:55pm »

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If your rep wants to sell wholesale, why not sell her the candles at your wholesale price, and she can sell them to the retail stores with her own markup added. Still offer her the 25% commission when she sells items at retail price.

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barncat
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Posts: 64

Re: Opinions on sales rep structure
« Reply #6 on: Jul 7^th, 2005, 4:05pm »

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What kind of sales reps are you looking for? No rep will touch you for 8%. Standard rate in the WHOLESALE gift industry is 15%. Anyone asking over 15 is ripping you off. Reps selling retail is different, but most average 20-25%$. I have two professional wholesale reps, which just this past month have written almost $25k in sales for me. And that is a lot considering the economy right now. Reps want to make money, and if they can't sell you product for the max they can get, then they say forget it. There are a lot of bad reps out there and a lot of good reps. You need to look at the client list and check references. A professioanl should have 2000-3000 active clients. You can get smaller reps, but they may only have 200-300 clients, which depends on how much money you want to make and your capacity as well.

Also, if you are selling wholesale, you shouldn't charge them tax if they provide a tax id. If they do not have one, then you should be charging them full retial price.

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www.thebarncat.com
Wholesale/Retail Electric's, Fixins, Tarts, Air Freshener Supplies

CSAS
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I love candletech.com!

Posts: 166

Re: Opinions on sales rep structure
« Reply #7 on: Jul 7^th, 2005, 4:12pm »

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on Jul 7^th, 2005, 4:05pm, barncat wrote:

Standard rate in the WHOLESALE gift industry is 15%. Anyone asking over 15 is ripping you off.

Also, if you are selling wholesale, you shouldn't charge them tax if they provide a tax id. If they do not have one, then you should be charging them full retial price.

Thank you, that's what I wanted to know. The standard rate. So, they get a flat 15% no matter how much they sell?

As far as the people I am selling wholesale to that do not have sales tax ID's. One lady buys a case a week from me, so it's more or less giving her quantity discount. Now the other 2 are probably not going to sell as much, so that's where I was thinking of discounting it, and selling to them as consultants and giving them 25% off of the retail price.

Thank you, I appreciate the help.

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