What % of gross sales is cost of sales staff?
Rural HR
20 Posts
We are a printing company and I have been asked to research what other companies in the industry budget the cost of their sales staff as a % of gross sales. Our VP of sales and promotion says 10%. How does that stack up? Thanks for the help.
M.
M.
Comments
When a buyer obtains a piece of merchandise for 50 cents one would resale the item at $1.00 thus creating a profit margin. Out of the 50 cents returned on the resale of the merchandise, comes employee expense (OPERATING COST), which is normally around 50% or 25 cents leaving 25 cents for all other expenses and the stated goal of 21 to 24 cents for the profit margin.
10% of the 25 cents for labor cost might be reasonable, now how important to your staff is the sales force? Do the ads roll in with little effort, or do you have to have a campaign on-going at all times to create the sales necessary to produce the profit margin required by the owner to stay in business? Without the ability to produce the owners stated profit margin goal...your question or concern will only last until the printER is shut down and sold off!
In the Retail Discount business the owners wanted from 21 to 24 cents returned on every $1.00 spent. When the bottom margin was lower (NOT REALIZED) it was time to see the cost of business being squeezed from every direction. At the same time when the numbers exceeded 24 cents the pressure was on to cut prices, for the fear of running off the customer.
I hope this helps you and your sales staff to build the right sales budget for your company to stay alive and well.
PORK
M.
I hope you enjoyed your current employer. I wish you luck on your job search.