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Half of every dollar sold has already been used up in producing or delivering the product. What is your COGS percentage of sales revenue (SR)? In the Figure 1 example the COGS is 50% of SR. 1.4 million is what this sample ABC Company has determined it needs to fund operations and realize their desired profit.ī. In the Figure 1 example the GSP target is placed at $1.4 million. It’s what is left of top line Sales Revenue (SR) after you subtract Cost of Goods Sold (COGS) and Sales Compensation Expense (SCE). Determine your Gross Sales Profit (GSP), more commonly known as Gross Profit after Sales: Think of the Gross Sales Profit (GSP) as the amount of money needed to fund the current operation expenses and desired net profit. What are the company profit goals and what’s the budget for sales compensation?īefore deciding on your plan structure or whether you should offer salary and/or commission, you first want to determine what your company needs in order to realize a return on sales revenue (gross sales profit), and what can be allocated to sales compensation. The first place to start is figuring out what the company profit goals and sales budgets are.
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Know your profit and sales goals as well as sales expense budget.Sales compensation has a number of elements to consider. I take a Five Stage approach when building a sales compensation plan.
#What should be the profit sales for year 1 in apsim download#
You can download the worksheet through the form at the end of the blog. I’ve also included a Compensation Builder Worksheet for those interested in following this process. My goal in writing is always to help you learn without getting you lost, so hang in there with me. This blog was challenging for me to write because of the mathematical and accounting terminology. (1) How much should I pay my sales people? and (2) How should I structure the pay plan? I’ll answer the two most common questions asked of me regarding sales play plans. Where does your pay plan fall? Are you paying your sales people too much or could it be you are under paying them? Creating a sales pay plan isn’t terribly difficult but it’s trickier than finding a simple salary range for non-sales positions.
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The HOW MUCH in this blog title could be describing overpayment or underpayment of your sales team.