Forums: Discussions for entrepreneurs and small business.

Everything is negotiable, and I`ve been told the range for independent rep commission is about 5%, and rep firms with their organization and offices get 5 to 15 %.  What determines different usual commission rates for reps or rep firms?

Let`s be specific.  Suppose a rep sells a Boeing 727 aircraft.  That`s a big ticket item.  I can`t imagine he would get 5%.

What about say a rep for office systems (cubicles or office machines) valued at 50K on the average.  What would be the usual commission rate?

And for large accounts valued at 5 millions?  20 millions?


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I don`t know about any industry except sewn products so I would have to say this varies. In apparel, if you`re a new or start up line, the commission is between 10%-15%. The most typical rate is @ 12%+. Once your line is proven (meaning it sells itself and stores consistently reorder), it might go down to 10%.

If you are a larger firm (10-20 million in sales) the commission may go down to 8%. Again, I can`t speak to other industries but in apparel, once you exceed 20 million or so, it`s more typical you hire an increasing number of sales reps as full time employees rather than relying strictly on independents. If these are employees rather than independent reps, obviously you pay salary, expenses and a much smaller rate of commission, usually 2%-3%. This also applies if you have a sales manager employee. If you use only independents but have an employee sales manager, they get salary plus a percentage of the take that the other reps bring in.

Lastly, obviously our sales orders are smaller than an airplane. If someone is "lucky" (or unfortunate) enough to score a large department store account that buys a whole lot of stuff, it is more typical that the store goes through the company directly usually via what`s sometimes called a buying office (long story). This becomes what we call a "house account" meaning the manufacturer services the account directly so no sales rep that gets a commission. 

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The sales rep I dealt with received 5% of the gross sales for our product in her service area.


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I used to manage a direct sales organisation, and its variable.

For things like credit cards or 12 month mobile phone contracts of around 800, the rept was getting 100 - 120. I would imagine the office got more.

WhatI observed is a bit of a dip with reps. Their earnings start high to break them in and get them excited. They then lower and flatten out as they become experienced. Then, if they are good the earnings shoot up as everybody tries to outbid and pay more to get them. That is where the *great* reps earn their money.



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