I see a lot of great answers here, there are a number of variables that need to be addressed first.
Profits can be misinterpreted in many ways, Gross Profit, Net Profit before EBITDA or after EBITDA , Gross margin net margin etc etc.
No One will have any issues with an entrepreneur charging a High Percentage on NET PROFIT after retained earnings or a budget is in Place for future business development.
However everyone will question a high % Charge from GROSS PROFIT.
So its better to declare your earnings from revenues as a part of the % of net profit below the line or after EBITDA and Taxes and Retained Reinvestment Capital
When I have hired sales reps to do lead generation, prospect development, and closing for me, I paid them 25% of the gross revenue I received from that sale for a limited period of time, usually 3 to 6 months. Plus, I reimbursed them for specified expenditures on my behalf.
I had to pay them enough so that they would do good work for me. It had to work financially for them. And it's worth a lot for somebody to do prospecting and sales for me!
I say, turn this around and ask how much you would need from this endeavor to make it worthwhile for you. Then convert that to percentages of the jobs you bring in. That is your negotiating target; if you don't get enough, don't do it.
Percentages must be based on gross revenue from the job, not net profit. As many others have said here.
If you are doing the full commercialization outsource for the company you should ask for 25%-30% of the revenue if possible if not from the profits but ask them to cover some expenses.
Please define your role and the services that you are providing. This will vary immensely based upon whether your role is consulting or sales representation, the size and life stage of the company and the nature of your relationship with the owners/senior management team.
Agree with 1st post... But in my experience in Contracting it depends on whether a base is offered but the norm is 20-25%...
I personally don't take straight commission unless the company is well established and has contracts, leads, etc and picks up all the expense... Then maybe 25%...
I do have some experience with dealing with south and central american countries with similar products. Have dealt with Mexico in the past.
My advise is to count the cost before getting involved, or even thinking of a commission structure.
1- Do you speak Spanish? ( is a plus). Who is the company that is really making it happen there? Learn from them.
2-In Most cases...... The company that gives the bigger kick back gets the deal, even if your price is lower, is part of how they do business.
3- These projects take a long time to close, if they ever close. You have to invest lot of time, flights,hotels,phone calls and they might even change their minds last minute. Who would be covering your expenses? How would you qualify a project in order to make the decision to get involved or not.
If I was you, and had all the above items in place, and felt comfortable in going forward, I would get product cost to me,and would then put my profit on it. If you take that route , you must have great selling and negociation skills with Mexicans or whoever your prospect is. People sell more expensive products than their competition everyday because of those skills.Wish you all the best in your decisions going forward.
any one please advice the arrange for commission percentage?
Though there are no straight answers but you should Minus your expenses and add your fees; The fees in essence should be aligned to the market rate
At the risk of being another "me to" herein. What is your role in the deal and what do you bring to the table? How will you continue to add value to the deal going forward, personally I do not like or pay annuities
Your question is good but you have to add more details for the best answer.In briefly, it depend on kind of business to earning a certain percentage of profit.
The commision depends on nature of business, gross margins and size of deal. I can give you some rough guidelines.
Small deal with margings of 40% ------ 10 to 15%
Medium sized deal margins of 40% ------5 to 10%
Large deals with margings of 25% ---------2 to 5%
Basically there is a certain cost of effort and the absolute commision should be proportionate to that (a bit more than that) and hence will work out to varying nt percentages of the deal size and absolute margin of the deal should be suffcient to cover that still leaving a reasonable part for your client. .
Please provide more information and data about the business, your role in the organization, understanding with the management, to name few. Once, that is provided, you would get a great and accurate answer. No one can give you an answer, without all the details. Also, if you are a partner, broker or outside representative. Please clarify all the puzzles to get an intelligent answer. Pradeep Berry
Depending on what you are going to sell, Real Estate can go from 4% up to 8% the project you get involved with will set the commission table with the exception when you are the marketing company or when you have an exclusive.
Unless the industry you work in is different than most of the world I am involved with commissions are paid on sales not profits.
Companies can make profits look like they want them to and therefore you can sell a great deal and never get paid.
The percentage can vary but is typically in the 5% range for the types of industries I am familiar with.
May be a better question would be "what is the standard commission rate for XXX?"
Just a thought
how long is a piece of string?
If in the contracting area
I think the real answer is a mix of what the client is willing to pay, and what you believe is the value that you have added to the business.
For me, I like to believe that I add more value to the business than my fees, and have walked away from business where I have not been able to add significant value. Its not just about additional profit added, its about value perception - both yours and the other parties. Where the value perception meets, you arrive at a fee, or in your case, a commission.
It is for business to be viabale you must have 20% EBITA at least more is welcome.
Considering the depth of info in the question, the most appropriate answer is: "It depends..."