How long should sales commission be paid for?
I am looking to hire a commission-only salesperson. I am thinking of offering him a 5% gross profit on each sale. My question is how long do I pay this commission for?
Is it the length of the ongoing customer purchases from us? Or for a period of 3-6 months, or once only? I.e. If all his customers buy $30,000 per week from me, he will receive $1,500 per week. But for how long does he receive this $1,500 per week? Is it the life of the customer, or should I cap it at say 6 months for each customer that comes on board?
There is no cap on what he can earn, only for how long. Obviously, if the customer leaves, then he will not be paid commission for the customer that left.
I don't want a situation where he sits at home because he is comfortable earning $3,000 per week because he has enough customers.
Also, is it a once only commission at a higher rate? Please help, as I am not sure what is fair for both parties. I have two salespeople that are on salary and working fine. My husband wants to employ another person as a commission-only salesperson.