37 replies to this topic

[scottgtt]

Yes, although it can go higher and anticipating the next question, it is based off of 10% not some absurdly high number some pay.

[jblvending]

Yes, although it can go higher and anticipating the next question, it is based off of 10% not some absurdly high number some pay.

So this account does $30,000 a mth, and or $360,000.00 a year.

[scottgtt]

Yes, I also receive commissions from sub contracts on three locations for this account. It is a large medical facilities chain with locations all over a two state area. It is a very nice account that we can service 24 hours a day 365 per year. We have also started the bidding process on a large prison facility and did a freedom of information request to get the details of their existing contracts and feel very confident we will have it soon.

[BVI]

I don't disagree on service, but when you deal with large accounts, a commission is not only essential it is required. I have one account that gets $3000.00 per month guaranteed and more if revenues are up. I am working on a state contract right now that is a bid and requires a commission. On smaller accounts ($1500.00/mos or less by my definition) I would agree with you, but in todays world, there are a lot of companies that can provide good service and nice machines etc... I have had my "decision" makers leave and bring me with them, but I have also seen new decision makers come in and want to bring their cronies, so I see a commission which usually requires a contract as a major deterrent to other companies etc... In the end, though, good service as you suggest is the base of any good company.

Scott, I do understand that there are accounts out there that insist on receiving commissions. The difference with me is that I always turn them down. The moment I sense that they are hell-bent on this subject, the discussion is over where I'm concerned. I won't pay commission to anyone. There are plenty of great accounts out there that will bend over backwards to bring in a vendor who will simply do the basics and do it well. Those are the accounts I want. Vendors who do the commission thing can have all of the commissioned accounts as far as I'm concerned. These accounts, from what I have seen of them, are the least loyal and problematic. That is not the kind of business I want.

[scottgtt]

Don't get me wrong, I hate commissions, but I make more by charging them and I use a rock solid contract. If you figure the money a account wants, you can usually raise the price by more than the commission amount to cover it and make more for yourself. Also, I give them a choice, lower prices and no commission or higher prices with a commission. Either way, I still agree with you regarding service and I don't think there is a right or wrong answer, it will vary by account, but if you provide good service you will always do well in the end.

[jblvending]

Yes, I also receive commissions from sub contracts on three locations for this account. It is a large medical facilities chain with locations all over a two state area. It is a very nice account that we can service 24 hours a day 365 per year. We have also started the bidding process on a large prison facility and did a freedom of information request to get the details of their existing contracts and feel very confident we will have it soon.

So if you lose this account, your out of business, I would think this account represents over 50% of your business due to our conversations a few mths ago on the amount of machines you have and the amount of business you do.

[scottgtt]

We have grown over the last few months, but yes it is about 50% of our gross, but we also have a rock solid contract, drafted by an attorney, not off of a website and we would really have to screw up to lose the account given the contingencies in the contract.

[jblvending]

We have grown over the last few months, but yes it is about 50% of our gross, but we also have a rock solid contract, drafted by an attorney, not off of a website and we would really have to screw up to lose the account given the contingencies in the contract.

I think I would have turned down that account, Contract or not, this is why:If your gross is $720,000, and your gross profit is $320,000(based on a 50% mark up)your paying this customer a commission of 10% which is in the amount of $36,000 a year, maybe more, that trims your gross profit by 10% which will in return will knock your gross profit magin around 45%, is this about right?On top of that the stress of losing this contract due to new owners, and yes if a new owner takes over, all contracts are null and void, don't think Id sleep well knowing that, this is why I preach no more than 20% of gross, you can still pay your bills if you lose a 5% to 10% account, but a 20% and more is putting your Company at risk.Please keep in mind that I'm not knocking you ,everyone has a risk level, yours is higher than mine, doesnt make it wrong, just trying see what your thought process is on this, I maybe missing the boat, beacause I'm alway interesting in learning something new in this business

[scottgtt]

Your point has merit, but my investment in this account is less than $30000. I could relocate the machines in a heartbeat. My risk level is high, I want my business to be in excess of 2 million withing 12-18 months. 2 million is a magic number because this is where you can join buying clubs etc... and save even more. Also, I am only $60000.00 or so from getting off the route and having others run it while I magage it. I understand your points, but like you said, risk is individual and I don't lose sleep. I like to read, and I especially like business books. Most, not all very successful business people indicate that a part of their success is figuring out reasons why things will work, not why they won't. They make it happen and yes, you can't stick your head in the sand with this approach, but it works for me. On another note, I once lot a $100,000.00 account when new management took over (my contract had expired and it wan't renewed). This hurt, but it was motivation for me to get out there and replace the lost account which I did in about two months. I personally hate these situations, but I also see them as a challenge and am confident enough in my abilities that I can sustain a hit or two while I replace them.
Scott

[jblvending]

Your point has merit, but my investment in this account is less than $30000. I could relocate the machines in a heartbeat. My risk level is high, I want my business to be in excess of 2 million withing 12-18 months. 2 million is a magic number because this is where you can join buying clubs etc... and save even more. Also, I am only $60000.00 or so from getting off the route and having others run it while I magage it. I understand your points, but like you said, risk is individual and I don't lose sleep. I like to read, and I especially like business books. Most, not all very successful business people indicate that a part of their success is figuring out reasons why things will work, not why they won't. They make it happen and yes, you can't stick your head in the sand with this approach, but it works for me. On another note, I once lot a $100,000.00 account when new management took over (my contract had expired and it wan't renewed). This hurt, but it was motivation for me to get out there and replace the lost account which I did in about two months. I personally hate these situations, but I also see them as a challenge and am confident enough in my abilities that I can sustain a hit or two while I replace them.
Scott

I'm just amazed at the figures you pay this account, that's 2x's the amount of commission I pay out in a mth, like BVI, I turn down accounts that want comission regardless of size, because in essence, there more concern about moines than service, and in that case, it's who can pay the most money game, and I'm not playing that game anymore.

[scottgtt]

I know it seems high, but with everything it is all relative. Ultimately after all expenses, I make over $100,000.00 annually on this account for approximately two days per week. I know some guys that have university medical centers that make an average of $9000.00 per WEEK on soda and pay a 20 percent commission. These are big guys and they rake it in on this account. Keep in mind that they don't pay what you do for soda. I am just getting big enough to see some of these dividends and they do come into play. I should get rebates in excess of $10,000.00 this year from Pepsi alone. There are a lot more to the numbers than just figuring a 50% margin and going from there. Canteen, Sweets America, Jackson Brothers etc... all pay commissions and these are all large successful companies. I only have one and a half employees outside myself, but as I grow I can take less and less from each account because of sheer volume. All the points that have been made are legitimate points, but I will guarantee you that there aren't any large companies out there that aren't paying commissions to their BIGGER accounts, it just doesn't happen except upon rare occassions. I have lots of accounts that don't get commissions, but I would not even get into the door of a state or federal institution, a medical center, a call center etc... without a commission. You can tell them about your service all day long, but it is a requirement to pay a commission, the purchasing department will not even talk to you without it again with rare exception.

[DAVending]

I use all usi equipment, the supervendor made for lance and it is built like a tank and has all the electronic functions you could ever dream off. So I think you should reconsider usi as a valid equipment mfg.

[scottgtt]

I have appx 20 of theri snack machines and they are pure crap. You may like them and that is fine, but I don't know if you have tried other machines, once I did I realized how bad USI is.