Setting up a commission pay structure for sporting goods team sales. What is the best way to do this?

Question

We sell hockey, baseball, softball, lacrosse, soccer, volleyball and more. We currently have a retail store and online site, but we want a sales force to go after teams. What would be the best way to set this up? Straight % would not work, since margin is different for each item. Any ideas

Answer 1

You could categorize the items according to margins and do an average percentage for each group. Let say you have a category with margins of 25 - 35%. You could pay a commission of say 5% on products in that category. Sale of higher margin products could be given a higher commission.
You would have to set up your computer system to pay the specific percentages on specified categories. The system should also be set up to recognize when discounts are given and reduce the commission payable accordingly. In a commissioned based system, you want to make sure that the sales reps get paid only when they collect on invoices. So not only will they be paid on commission but also on a collections basis. This is if you sell goods on credit. You do not want to run the risk of paying commission on bad debts. My company uses this system and it has worked well. We use ACCPAC software. All the best!