Easy Negotiation Techniques

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One of my readers, a commission salesman, sent me a question the other day that I’ve been asked several times:

What percentage is the industry standard when it comes to negotiating sales commissions?

I’ll share with you my response to him, and I hope it gives you some guidance as to negotiate compensation.

Your sales commission is a truly negotiable item and just as there are
no “standard” contracts, though every stationery store
sells documents that have that header, there are no
hard and fast rules regarding straight commission compensation.

I have seen 20% a great deal, but this will vary based
on a lot of factors:

How well known is the product?

What is the profit margin?

How long does it take to make a sale?

How difficult is this item to sell?

Here’s a commission plan that really worked for me as a salesman, and you might want to negotiate the same sort of scheme.

During graduate school I sold ball point pens, two gross at a shot over the phone.

I “bought” the pens from management at something like
16 cents and sold them for 33 cents. This was a “keep
all over” commission plan, so I could choose to sell
pens at any price I wished. My upward limitation was
the 49 cents engraving at the top of each pen’s
barrel.

I made great money this way, and the house got its
price, too. It was a win-win commission arrangement.

But with any plan you need to be careful, especially if you’re selling for someone else. Make sure
SOMEONE ON STAFF NOW is making great money and ask that
person to confide in you, telling you: (1)
Management pays on time, and (2) Management has no
history of cutting back on the commission structure.

Also, make sure that management does not keep more
than a 10% “reserve” against charge-backs, if they
compute them, at all. Also, it needs to be explicitly agreed that funds that accumulate in a
charge-back reserve are yours, released to you at a
definite point in time, i.e. 60 days after sale or
upon receipt of payment from the client.

Hope this helps.

If you need an absolutely astonishing telephone
training program, have your company purchase THE NEW
TELEMARKETING AUDIO SEMINAR shown at my web site, or if you need an on site training program or speech, contact the author.

Dr. Gary S. Goodman is a top trainer, conference and convention speaker, sales, customer service, and negotiation consultant, and attorney. A frequent expert commentator on radio and TV, he is also the best-selling author of 12 books, more than 1,000 articles and several popular audio and video programs. His seminars are sponsored internationally and he teaches at more than 40 university extension programs, including UC Berkeley and UCLA. Gary’s sales, management and consulting experience is combined with impressive academic credentials: A Ph.D. from USC, an MBA from the Peter F. Drucker School of Management, and a J.D. degree from Loyola Law School, his clients include several Fortune 1000 companies.

His web site is: http://www.customersatisfaction.com and he can be reached at: gary@customersatisfaction.com

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