I know we’ve heard them all… real estate sales, pharmaceuticals etc…but I need ideas about big ticket items where you can earn a 7 figure commission from each sale.
A college professor once told me a story about a gal who sold some kind of microfilm devices that are used at DMVs and hospitals. And supposedly each unit cost around $10M…And her cut was a cool $1M. She sold 4 units in one year and retired early.
I realize this is a bit of a random topic, which is why I chose to post it here in hope someone can shed some insights. Thanks in advance.
While commissions of 10% are not unheard of for some real estate transactions that are small to bother with otherwise, or require lots of marketing investment and pushups by the real estate agents, for a manufacturer to pay its own sales reps 10% of the cost of a ten million dollar device as a sales commission seems unlikely in the extreme.
$10 million sounds like way too much money for any microfilm device. It sounds like a myth.
I did know one computer salesman who made a massive sale around 1970. He had to sue to get all of his commission. I don’t know how much he got in the end. Around that time lots of high-tech high-priced equipment was emerging and companies scrambled to restructure commissions that had been based on selling typewriters and copy machines.
I think its uncommon for someone who is simply a salesperson to earm over $1 million a year in commissions. But if they can do it, they are well worth the money.
Two words. Fucking hogwash! You’re full of shit, astro. Manufacturers have more margin than anyone to play with. A ten million dollar device? Tell me about this ten million dollar device. How many guys do you know who can close a ten million dollar deal? Hogwash!
Sales reps fill many different roles. At top of that chain, for an independent manufacturer’s representative, 10% gross of sale would be considered very low. Independent manufacturer reps can scoop 25-30% of a deal they created without anyone batting an eyelid. These guys get no weekly paycheck. They live and die on commission checks. They get 1099s and file quartery taxes. These guys are self employed corporations.
An in-house or road-warrior sales rep employed by the manufacturer? 15-20% is not at all out of the ballpark for the outside guy. The inside guy generally gets higher base salary and less of the the final order action. Outside guys get much lower base, or no base, and live on commission.
It’s fairly common for outside sales reps to tip out their inside guys on a regular basis. It’s different everywhere. Very few sales guys have 7 figure income years, let alone 7 figure income orders. To the OP? Yeah, the story is a bit shady. Ten million dollar microfilm machines? Presumably decades ago?
Probably bullshit, but I’ll tell you what. If you make some machine that nobody else makes, such that you put a ten million dollar tag on it, how bad would you feel about breaking off 10 points to the guy who sold it for you? Honestly, if you weren’t paying him a salary, 10% is bordering on criminal usery.
How many of your 10 million dollar machines can you sell without the sales guy? I mean, without that guy, what the fuck do have? A great idea?
Typical real estate commission is more like 3%. Simple math tells you that in order to earn a $1 million commission you need to sell a $33 million home. How many homes like that are there on the market in any given year and how many people are there selling them?
Financial services professionals like traders and investment bankers can earn year end bonuses in the millions. But they typically work on many transactions throughout the year.
I don’t know anything about vague mystery devices.
I’ll give you a little inside scoop on real estate sales.
In our area, real estate commissions are usually 5-6%, paid out of the seller’s proceeds and split between the brokers that represent the buyer and seller. Some states don’t allow a broker to represent both sides, but most do. But if we take a typical sale, that 3% is the most common compensation amount for a broker to take in on a sale for representing one “side” (either party) or 6% for both sides.
If the broker is the one actually doing the work in the transaction he/she keeps that whole amount. But most of the time, the actual work is being done by a salesperson under that broker’s supervision, and that salesperson keeps a split of the broker’s compensation depending on their agreement with the broker.
In our area, the very best sales people turn over about 40 sides. We average somewhere in the 200K range per sale, so that’s about $3000 per side. That’s $1.2M before the split, and people producing at that level keep the lion’s share of their commissions, typically at least 75%. So the top end people in our area are right around that million dollar mark before expenses. But most anyone who is doing that volume of business also has an assistant or two to pay and other expenses. That level of production means that you are juggling 4 transactions in escrow at any given time, probably 10-15 active listings, and a handful of active buyer clients. If you’re doing that level of business, you get real selective about the buyers you take on, or you refer them out to a buyers’ agent. It’s a 60 hour a week job minimum at that level. But yeah, it’s a good living if you can do it.
Most of the agents in our market do much less than that. The average across our entire MLS is about 3.5 sides per year. So those 40 side producers are definitely outliers, and there are only maybe 2 or 3 of them. In some big markets we hear about people who turn over 300+ sides in a year, but those people typically have large teams.
The median annual wages, including commissions, of salaried real estate sales agents were $40,150 in May 2008. The middle 50 percent earned between $27,390 and $64,820 a year. The lowest 10 percent earned less than $21,120, and the highest 10 percent earned more than $101,860.
Median annual wages of sales representatives, wholesale and manufacturing, technical and scientific products, were $70,200, including commissions, in May 2008. The middle 50 percent earned between $48,540 and $99,570 a year. The lowest 10 percent earned less than $34,980, and the highest 10 percent earned more than $133,040 a year.
The median annual wage-and-salary wages of securities, commodities, and financial services sales agents were $68,680 in May 2008. The middle half earned between $40,480 and $122,270.
All from the U.S. Bureau of Labor Statistics.
There are vanishingly small numbers of sales persons who are making 7 figures per sales.
On the flip side, to a degree most jobs have a high degree of sales requirement after a certain point. I’m a real estate developer and we have to essentially sell things to potential tenants or buyers all the time, even though the relationship isn’t typically the same as the one between a commissions-earning sales representative and a potential customer.
Something to keep in mind too is for example the people zoog is talking about who earn $1.2m+ in commissions as a real estate agent or the people selling $10m machines are pretty much the cream of the crop of traditional sales persons. The vast majority of people who are in sales, real estate, industrial or otherwise will never clear that amount. Those that do work grueling hours and have high interpersonal skills that allow them to close those deals, and a strong understanding of what it takes to convince someone to buy. Many people who go into sales lack the drive or one of those innate skills required to be that successful.
For every sales person who is making six figures there are probably many more who dip their toes into the field and then leave it a year or so later because they aren’t making very much money.
For example without naming names I know of a relatively large insurance company in which the top agents are clearing $120-150k a year, but first year agents may be making less than minimum wage from their commissions and have to work a second job to survive. Some of them keep at it and build up to six figures, but far more of them give up quickly and leave the organization. That is very typical of sales jobs. If you’re an experience salesperson looking to get into heavy machinery sales that is one thing, but if you’re someone on the outside looking in thinking you can just quickly get in and make $1m is like watching Alex Rodriguez play an inning at third base where no balls come his way and think “man I could do that, where’s my $25m dollars.”
Very interesting input. Yes the gal mentioned was a needle in the haystack. But I wanted to see if that can still happen in the sales world. And based on the feedbacks here, I’m assuming it can IF you are in the right place at the right time.
And the device mentioned here was some kind of high end b to b product and not for consumers. See, I’ve always wondered if you sell those kind of equipment to say other businesses or the goverment and not consumer, then maybe that is where the money is. And of course, these won’t be the type of sales jobs that you see on job boards either. You’d have to know someone to get in.
Twenty years ago commissions were much higher for most industries. But those kinds of commissions create a huge SG&A burden that looks really bad on the annual report. As publicly held companies have been driven by stock price, commissions got cut.
Sales people are critical, but in the real world any manufacturer has the choice to use a commissioned sales staff or pay the sales staff a salary + bonus, or a straight salary. If you have machines that sell for 10 million a pop you think there is manufacturer somewhere in this universe that is loading in 10% (or up to 20-30% per your note) commissions (ie $ 1,000,000) per machine vs the option of paying a salaried sales and marketing person or staff?
I someone was selling industrial wrenches or tools for small manufacturer I could understand a 10% or greater commission. When the dollars are in the tens of million the equation changes. I think it’s very unlikely that a manufacturer capable of making 10 million dollar machines is making the calculation that a 10% sales commission make any sense.
What are the manufacturer commissions on selling 10 million + airplanes or 10 million + luxury boats for example? What does GE pay it’s sales people to sell their turbines? What industrial manufacturer with a 10 million product even uses a fully commissioned sales person vs a salaried sales person? I also think your notion that manufacturers in a competitive industrial environment for very large ticket items have so much excess profit they can (or would even logically be willing to) allocate 10% for a sales commission for huge ticket purchases is questionable.
Please provide some cite or proof of some kind for your assertions about industrial manufacturers of machines selling at 10 million or more paying 10% commissions.
At the same time, I’d bet you any amount of money that the guys that get $1 million commission per machine have an overhead to sell that machine of at least 50%.
I’ve been around the block a few times and have not encounted a commission sales job where one could make a million buck commission with minimal overhead.
A top investment bank sales person will make well in excess of $1M bonus, but there are not that many of them. If you look at all the sales people in the finance industry, there are definately an elite crew that make a million dollar bonus (and those that make 10 bars) but it’s a pretty small group compared with the entire industry.
I personally know a guy who makes over a million dollars per year in commissions as a sales guy for a company that makes very specialized, highly-customized enterprise software applications.
His base salary is something like $50,000, and most of the other salesman at that company don’t make nearly as much. But he works extremely hard, is actually very knowledgeable about what he’s selling, has a huge base of clients that love him, and every year he convinces the same clients to buy another set of big support contracts, customized modules, migration projects, integration projects, etc.
It’s amazing, really. And the company is more than happy to pay him that much because he brings in such an enormous amount of business for them.
So, Boeing just recently inked a deal with Qatar Airways to sell about 5 777 airplanes. The deal is probably worth in the neighborhood of a billion and a half dollars.
Are you saying that the guy who closed the deal likely earned a commission of somewhere between $150 million and $450 million dollars? (Based on a 10% commission at the “very low” end, or 30% “without anyone batting an eyelid” on the high end.) Because the CEO of Boeing’s commercial side makes $6 million a year. Link.
I believe that the development contract was altered in the middle of the program to 5% fixed fee (pure profit) and 6% incentive fee (that they had to win by meeting cost and schedule performance).
The thing is, that if the government buys things that aren’t on the general schedule, then they are buying things that need to be designed specifically for government use. That’s always going to be more expensive, just like comparing the price of a Honda Accord vs. Homer Simpson’s dream car.