Blog Article

07 Dec

On commissions and fixed costs

 

Minimum fixed costs for the manufacturer

No or low fixed costs, neither social contributions nor costly training – your new sales rep will even invest all the travel expenses and, of course, his extensive working hours. He is usually paid on a commission basis only. This is the most common reason why manufacturers use ECO-EXPORT services for finding new sales partners like manufacture independent sales reps.

 

Reasons for a base salary + commissions

In practice, sales partners might ask for a combination of fixed and variable components, possibly for the first months of the cooperation. A reason for this is their concern that their own sales contacts, established over a long period of time – and which are the capital of any commercial agent – are delivered to the manufacturer at a price too low. Or that the sales cycles are too long, e.g. for plant technology, for the commercial agent to guarantee his own financial liquidity. Another reason is that representatives and manufacturers are not yet familiar with each other: who guarantees the sales representative that his huge time investment is actually answered with the same intensity from the manufacturer? Will the manufacturer meet his obligations regarding product, service, delivery times?

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