Could you pay a tech 40% commissions long term ?

[SMRBAP]

This is 40% of gross revenue on carpet cleaning services,..... are you sitting down,..... and water restoration services.......

Could you afford to - would you if you could?


Have a tech that is once again seeking greener pastures, this is the third (and will be the final time, he will not be hired back), to a firm promising him this. They are seeking to learn how to do everything past basic carpet cleaning.

My educated guess is he'll be welcomed with open arms and paid this 40% until his abilities there are spread company wide, and at that point will find himself speaking with management explaining they found they can't afford 40%, and must reduce it to X% - or they no longer need his services.

He will be a standard employee at this 40%, he does not have his own truck, insurance, etc etc.

Asking because I am truly interested in knowing if anyone could afford to pay a single tech 40% on gross on cleaning - and - restoration jobs.

 

[Chris A]

I couldn't, and is it necessary for the job?

 

[Ken Snow]

Why couldn't you? Please show your math.

We don't pay that much but our blended rate is about 31.5% plus all costs including taxes, benefits etc.

 

[SMRBAP]

Ken - I am talking 40% of every gross dollar - before anything else, then the costs of taxes and toppings.

I don't have the time to break my firms numbers down to line items on the forum - but at the current rate, they realize approximately half of profits on cleanings.

At the current pay scale a below par cleaner at $31k/yr, a cleaner on par at $45k/yr, someone slightly above par $50k/yr, and a shining star has the potential to break into the high $60k mark.

Keep in mind - we live in Indiana, not Cali,..... cost of living here is low, about 25-30% lower than the US average to be more specific. So a top tier guy here at let's say $65k, translates to $120k in somewhere with a higher COL like California.

$65k a year in Indiana makes for home ownership, nice car/s, that yearly family vacation, and someone smart with their $ - the ability to invest and plan for their golden years.

I have seen this a dozen times in the last 7-8 years with my guys - they are removed for much more $ - the company learns what we do, and the tech in 3-12 months is calling me for their old job back - because they windfall of extra money was yanked out from underneath them.

And Ken - you pay your guys a blended rate of 31.5% on water losses? I find it hard to believe that any company can, or rather, would, pay that rate on restoration, esp if they rent equipment, equip rental makes up 30% to sometimes as much as 60% of an invoice.

IMO, and knowing my market, there is no way this guy is going to get 40% of gross long term, running a few scenarios, averaging them out, he's at $175k/yr, in Indiana.

 

[SMRBAP]

Ken, what does your highest paid tech (full time dedicated cleaning tech only, not manager etc) make?

To be honest to the bottom line in this thread, maybe that's the better question.

 

[Ken Snow]

I'm in Detoit not Kali

I didn't ask for all your line items- it is a simple math question.

Take what your blended % is now (ours is 31.5% approx for On=Location Cleaning Division)

Now take your pretax profit- ours is about 17%

If I paid 40% (blended rate) it would drop my profit for that division to 8.5%. I would not do it, but could certainly do so.

Top Specialists in my company make 70k plus and some as low as low to mid 50's. Assistants make 25-35k typically

 

[Dolly Llama]

IMO, and knowing my market, there is no way this guy is going to get 40% of gross long term, running a few scenarios, averaging them out, he's at $175k/yr, in Indiana.

you gross over $400K on ONE truck with one tech in it?? :shock:
or are you including WD equipment rental in that??


..l.T.A.

 

[Chris A]

Why couldn't you? Please show your math.

We don't pay that much but our blended rate is about 31.5% plus all costs including taxes, benefits etc.

Cause I wouldn't make enough money...

 

[Ken Snow]

That was a little lame Chris :-)

Sent from my DROIDX using Tapatalk

 

[joe harper]

Ken - I am talking 40% of every gross dollar - before anything else, then the costs of taxes and toppings.

I don't have the time to break my firms numbers down to line items on the forum - but at the current rate, they realize approximately half of profits on cleanings.

At the current pay scale a below par cleaner at $31k/yr, a cleaner on par at $45k/yr, someone slightly above par $50k/yr, and a shining star has the potential to break into the high $60k mark.

Keep in mind - we live in Indiana, not Cali,..... cost of living here is low, about 25-30% lower than the US average to be more specific. So a top tier guy here at let's say $65k, translates to $120k in somewhere with a higher COL like California.

$65k a year in Indiana makes for home ownership, nice car/s, that yearly family vacation, and someone smart with their $ - the ability to invest and plan for their golden years.

I have seen this a dozen times in the last 7-8 years with my guys - they are removed for much more $ - the company learns what we do, and the tech in 3-12 months is calling me for their old job back - because they windfall of extra money was yanked out from underneath them.

And Ken - you pay your guys a blended rate of 31.5% on water losses? I find it hard to believe that any company can, or rather, would, pay that rate on restoration, esp if they rent equipment, equip rental makes up 30% to sometimes as much as 60% of an invoice.

IMO, and knowing my market, there is no way this guy is going to get 40% of gross long term, running a few scenarios, averaging them out, he's at $175k/yr, in Indiana.

Anthony,

It can certainly be done... :idea:
You are correct ...they will be prostituted for their experience...& kicked to the curb...!

HOWEVER....40% is CHEEP..."If you have NO IDEA what you are doing."... :idea:
It is NO DIFFERENT...than subbing out work that you cannot get to...!
If you were subbing out job's at 70% to the CONTRACTOR...The 30% is better than NOTHING..!

I believe he is BSing you on 40% gross on W/D.work... !gotcha!

YOU can pay 40% on w/d work.."LABOR ONLY"..just not on equipment rental & supplies.. :!:

If you would LIKE to retain this employee..????...OFFER HIM MORE ... :shock: :shock: :shock:

Offer him 50% of the gross.....

Tell him he will be responsible for FUEL,CHEMS,HELPER, GENERAL MAINTAINCE OF UNIT & VAN,
& CUSTOMER SATISFACTION .!!!!!

HE WILL BE RESPONSIBLE UNDER $250.00....&....50% OF ALL MAJOR REPAIRS....!!!!!!

"Once he realizes....how much it REALLY cost to operate...He will learn to RESPECT how well you are paying him NOW.."





..........................................WORKS EVERYTIME.............................. :mrgreen:

 

[SMRBAP]

@ Harper - The last time he left - he purchased a van, the vista print just add water business kit !dork! , and was off to set the world on fire. . . . . except he found out exactly what your response was getting at - ended up taking a bath, near losing everything he had worked for for years, and came back.

Here, he had the potential to be in the high $60's this year, would have been his FIRST FULL YEAR here, working towards the 70's, and was looking like the guy that was going to run the show at a second location in another area here in IN - where he legitimately could have been - long term - in a well into the 6 figure range position. . . .

But - as with most youngsters these days, it's about this week and next.

@ Meat - that $175k/yr was me running some scenarios of what he'll do $ wise cleaning for them, including what I figure they will pull in our area restoration wise as a non PSP - that's my educated middle of the road estimate as to what he'd do at 40% - there. If they don't give him 40 total on resty work, less gear, you could remove maybe 20-30 k of that - still $145k??? Long term no way - he's in line for a good whoring out.

They'll learn what he does, and have 2 top tier techs paid for the same amount.

Whatever his end - the door here for him has been permanently closed.

 

[dgargan]

Wow! My tech's would average $104,000 a year each. They would love me but my wife would shoot me with the pay cut I would have to take.
I can't see how a small O.O. with 1-3 trucks could do this.

 

[Brian R]

%s are relative...what's the average ticket? Fair price or gouging the customer? If you can make the profit larger on each job then the 40% could be less....But that's a "best case" scenerio....and probably not going to happen.


Why not do somewhat of what Harper said? If the guy has his own truck.....pay him as a sub. If he doesn't...sell him one or help him buy one.

These are all a PITA of course and your best recourse is to tell him to kick rocks.....At that level, if he's not a company man....He never will be.


You could just tell him...."If you want more money....Make more money"....That's the beauty (and downfall) of commission.


The more you know. 8)

 

[gavin]

I paid a guy 50% gross of everything he did in his territory. I provided all equipment advertising, gas, phone,,, everything. he went did the job and took 50%

yes I still made money. not great money, but still. I figured 50% for him, 40% business expenses, 10% for me. I had that arrangement for 3 years and I couldn't have been happier.

 

[Shane Deubell]

Sorry for this industry i need a fat margin, no contracts, no real tech advantage.Lots of competition

This is crazy IMO.

 

[sam miller]

If a guys wants that much give him 50 percent minus 5 percent lease on Van that he has to turn in if he's not working! if he does 3 grand a week that a 150 per week or $600 a month for unit payment.

No lease to own! then he makes 45% out of that he pays for everything else! That would be sub contracting he would need his own business insurance and Like harp said be responsible for any problems. If you had to fix anything charge him no workmans comp no SS to deal with.

Your only cost would be advertisement!

Its hard to find whats best My dad subs my uncle uses employees they're both broke! My uncle got popped for a workmans comp claim 80k thats alot when your looking to retire soon.

 

[Greg Cole]

This is 40% of gross revenue on carpet cleaning services,..... are you sitting down,..... and water restoration services.......

Could you afford to - would you if you could?


Have a tech that is once again seeking greener pastures, this is the third (and will be the final time, he will not be hired back), to a firm promising him this. They are seeking to learn how to do everything past basic carpet cleaning.

My educated guess is he'll be welcomed with open arms and paid this 40% until his abilities there are spread company wide, and at that point will find himself speaking with management explaining they found they can't afford 40%, and must reduce it to X% - or they no longer need his services.

He will be a standard employee at this 40%, he does not have his own truck, insurance, etc etc.

Asking because I am truly interested in knowing if anyone could afford to pay a single tech 40% on gross on cleaning - and - restoration jobs.

You are correct- clearly they are milking him. We have people offer our contractors 40% and sometimes even 50% - the companies eventually either go out of business or starve the tech out. It's JUST not affordable. And in water damage- downright stupid.

 

[Greg Cole]

I paid a guy 50% gross of everything he did in his territory. I provided all equipment advertising, gas, phone,,, everything. he went did the job and took 50%

yes I still made money. not great money, but still. I figured 50% for him, 40% business expenses, 10% for me. I had that arrangement for 3 years and I couldn't have been happier.

So, you had all the exposure and only netted 10%? wow! Wasn't worth your time was it? Let's say he did $200k on his truck- you only made $20K?
How could that be worth it?

 

[gavin]

what time? after I had one rig running there wasn't any more time involved in setting up the second rig, the only real expense was the equipment... that I already had sitting around as extras.

I did 50% because I was helping out someone I already knew and trusted, but I made money from the deal, and if I did 50%, 40% seems very do-able long term. plus, the motivation at 50% really gets a self starter running hard, and growing my company.

 

[Art Kelley]

This is 40% of gross revenue on carpet cleaning services,..... are you sitting down,..... and water restoration services.......

Could you afford to - would you if you could?


Have a tech that is once again seeking greener pastures, this is the third (and will be the final time, he will not be hired back), to a firm promising him this. They are seeking to learn how to do everything past basic carpet cleaning.

My educated guess is he'll be welcomed with open arms and paid this 40% until his abilities there are spread company wide, and at that point will find himself speaking with management explaining they found they can't afford 40%, and must reduce it to X% - or they no longer need his services.

He will be a standard employee at this 40%, he does not have his own truck, insurance, etc etc.

Asking because I am truly interested in knowing if anyone could afford to pay a single tech 40% on gross on cleaning - and - restoration jobs.

You are correct- clearly they are milking him. We have people offer our contractors 40% and sometimes even 50% - the companies eventually either go out of business or starve the tech out. It's JUST not affordable. And in water damage- downright stupid.

Get real Greg. You should be paying your subcontractors 50%. I can't see how they could be making any profit at 28%, which is about my COB (with no advertising other than a tiny YP listing). You create your own problems with your miserable customer retention rate.

 

[Brian R]

Cole has a good mind for business. You should probably listen to him on the particulars.

When paying my guys 50% (subs) Cole told me I was paying them too much. The one thing that saved/s me is my tickets are a pretty good amount of money AND they all own their equipment/chems/etc. So my 50% of $200 is better than 70% of $100 etc.

I've found other ways to do this carpet cleaning gig and it's working well. But at the end of the day, I'm still taking home what I need to.



The structures change ....But the money should stay the same (or better).

 

[joe harper]

ALL GOOD POINT'S....!


"NEVER say NEVER"....I am always open to taking an employee back... :shock:


I INVEST a significant of TIME in my employee's personal & professional GROWTH....!

I have "sPliT this ApplE" a million ways..."REMEMBER" I have groomed my son to TAKE-OVER...

Hourly
Hourly + commission
10% commission as helper
20% with helper
30% no helper
40% he pays labor & supplies
50% he pays labor & chem+ maintenance
70% leasing unit / pays all cost of doing business
Weekly DRAW...based on %...with a bonus on 1st of every month
100% paying me a pre-set DRAW

EVERY pay scale has advantages & "CONSEQUENCE'S"....Find their "comfort zone"...!
Happy employee's are PRODUCTIVE employees...!
"THEN EXPECT IT TO CHANGE" Whenever circumstance change...!

THE KEY TO SUCESS..????? "Is to DEFINE." WHAT "YOU" WANT TO MAKE... :idea:

That is the bEaUtY of the %...!
I can make "MORE" profit paying my SON...90%...than 3 inferior tech's @ 30%..... :shock:

The PERFECT employee..IS A PAIN IN THE ASS...... They are aggressive,PrImA-DonnAs, &
are HIGH MAINTAINCE & ARROGANT lil shits in general ... However....
"The client NEVER see's these personality trate's... !gotcha!

IF you are so INSECURE....that you cannot live with FACT...that they are BETTER THAN
YOU AT RUNNING THE BUSINESS.... :!: YOU a FOOL...

You should ALWAYS prepare for the WORST scenario...!



ps "If YOU..have done YOUR job properly..?" The employee will TRUST & RESPECT you as a BOSS
& a MENTOR .....when the disaster happens..... "and IT WILL...!"
He will COVER YOUR ASS.....because he believes in your SYSTEM.....and YOU..... !!!!

 

[Brian R]

My guy in Sac is probably right at about 75%...But all I do is collect a check and watch the websites.

If he makes more money....then the % he gets is higher respectively.

Like sed...It's all about what YOU get after all is sed and dun.

 

[Greg Cole]

what time? after I had one rig running there wasn't any more time involved in setting up the second rig, the only real expense was the equipment... that I already had sitting around as extras.

I did 50% because I was helping out someone I already knew and trusted, but I made money from the deal, and if I did 50%, 40% seems very do-able long term. plus, the motivation at 50% really gets a self starter running hard, and growing my company.

I guess we have diferent ideas of what being in business is about. I don't do this to "Help my employes or my subs out" I do this because I want to make money.
Risk vs. reward should ALWAYS be a factor in how you run your business.

 

[Greg Cole]

This is 40% of gross revenue on carpet cleaning services,..... are you sitting down,..... and water restoration services.......

Could you afford to - would you if you could?


Have a tech that is once again seeking greener pastures, this is the third (and will be the final time, he will not be hired back), to a firm promising him this. They are seeking to learn how to do everything past basic carpet cleaning.

My educated guess is he'll be welcomed with open arms and paid this 40% until his abilities there are spread company wide, and at that point will find himself speaking with management explaining they found they can't afford 40%, and must reduce it to X% - or they no longer need his services.

He will be a standard employee at this 40%, he does not have his own truck, insurance, etc etc.

Asking because I am truly interested in knowing if anyone could afford to pay a single tech 40% on gross on cleaning - and - restoration jobs.

You are correct- clearly they are milking him. We have people offer our contractors 40% and sometimes even 50% - the companies eventually either go out of business or starve the tech out. It's JUST not affordable. And in water damage- downright stupid.

Get real Greg. You should be paying your subcontractors 50%. I can't see how they could be making any profit at 28%, which is about my COB (with no advertising other than a tiny YP listing). You create your own problems with your miserable customer retention rate.

I am quite pleased with my customer retention rate.
and if I paid them 50% - I would have a going out of business plan. Clearly they are making money or they wouldnt stick around.

From your perspective, you likely feel that I don't work and don't deserve to be well compensated. Until you run an operation my size, you really don't have a clue.

 

[Art Kelley]

[]

I am quite pleased with my customer retention rate.
and if I paid them 50% - I would have a going out of business plan. Clearly they are making money or they wouldnt stick around.

From your perspective, you likely feel that I don't work and don't deserve to be well compensated. Until you run an operation my size, you really don't have a clue.

I know you work hard Greg. I just think you could be as well compensated if you treated your subcontractors as the golden goose they are. If you gave them a better percentage of the jobs they could do a better job and you could spend a LOT less advertising to find new clients and ultimately you wouldn't have to work so hard. As it is you treat both your customers and your subcontractors as disposable crap who can be easily replaced because you are so clever at getting work. I know you feel that you can move to other markets if your Atlanta market goes sour, but it's just unnecessary and not good for the industry to work this way.

 

[Desk Jockey]

At the current pay scale a below par cleaner at $31k/yr, a cleaner on par at $45k/yr, someone slightly above par $50k/yr, and a shining star has the potential to break into the high $60k mark.

I'd counter offer if he is worth it to you (not the 40%) and see what he does.

You're paying well for these parts, you'd have them lined up waiting to apply here.

My niece is 2-years out of college and not quite making $30,000.00. :shock:

 

[Brian R]

Only take advice from someone you would trade places with.

 

[Desk Jockey]

Russell Brand? :mrgreen:

 

[SMRBAP]

@ Harp - the guy had a long term career path laid out in front of him - why offer him more just to keep him now as a tech? I have long term goals, short term fixes don't mate well with long term needs imo. That's why he won't be brought back. I want and need people that are interested in a company with a ladder, where each rung is earned, and not extorted.

Bottom line - I am looking to add a location in the next 6-12 months, and another 6-12 after that. If I beat 40% - what do I have to incent someone to run satellite location with?

Remember Willy Wonka - Charlie gave back the everlasting gobstopper, won the game. For my new locations, I have to have someone that is willing to stick things through, thin and thick, and I know it will be thin for the first year, two, maybe three, but it will pay off for that person in the long run. This cat proved undeniably, he ain't the guy for that scenario.

At my flagship location, I have $800k invested in physical items alone, not to mention the hundreds of thousands of marketing dollars to establish a foundation over several years.

I have no interest in spending well into the 7 figures to solidify new locations to net 5-10%.

Anyone that would want more than what I have planned out, needs a sanity check - or to put their own $ at risk and open up shop themselves - which he tried, and failed at already.

I have 2 guys with loads of potential to take his place for what is down the road, just a matter of them accepting the grooming they need respectively.

Time will tell - will they take the everlasting gobstopper to WIlly's competitor, or hand it back