How do you guys pay employees commission on lotion sales ?

[npeifer]

I haven't posted much on the board however I have been reading everything for a couple of months and enjoy all the thoughts everybody shares here.

I am looking for a little help when it comes to lotion sales. I have numerous bottles and packets by Designer Skin, Cal Tan, and Australian Gold as well as a few others and would like to offer an incentive program to my employees when I first open for business next week.

We have my wife working and 2 other employees and the both make around $7.00 an hour. I was thinking about paying them 5% of the sale price in commission and add it to their check each week ? Is this similar to what you guys do or not ?


Please give me some ideas about your pay structure for lotion sales. I have done some searching and gathered ideas but it would be nice to have everybody discussing in one thread.

Neal

[Kathe]

We pay minimum wage and then commission. They get 10% on any product sold and 3% for formostar packages. We pay that on every pay period.

BTW - welcome Neal!

[JustTans23]

We used to pay 5% commission on packets and 10% on bottles. + $25 for whoever sold the most. However, that was a little unfair because some employees dind't have as many shifts or as busy as shifts as others, so we started paying by LPPA. (lotion per person average)

We take the amount of product the employee sold and divide it by the amount of customers they helped. (ex. $700 in product sold to 350 people = LPPA of $2.00)

Whatever their PPA is determines what % of sales they get in commission.

Product Per Person Average

% of sales you receive

Less than $0.45

0%

Between $0.45 and $1.00

5%

Between $1.01 and $1.50

10%

Between $1.51 and $2.00

15%

Over $2.00

20%

That way, they aren't getting paid if they don't sell, and its more fair because its based on the amount of customers they see. At least thats my opinion. I found the other way was paying out a lot of commission for someone who had an LPPA of $.50, which is bad.

Hope I made sense. Sometimes I don't.

[npeifer]

Originally Posted by JustTans23

We used to pay 5% commission on packets and 10% on bottles. + $25 for whoever sold the most. However, that was a little unfair because some employees dind't have as many shifts or as busy as shifts as others, so we started paying by LPPA. (lotion per person average)

We take the amount of product the employee sold and divide it by the amount of customers they helped. (ex. $700 in product sold to 350 people = LPPA of $2.00)

Whatever their PPA is determines what % of sales they get in commission.

Product Per Person Average

% of sales you receive

Less than $0.45

0%

Between $0.45 and $1.00

5%

Between $1.01 and $1.50

10%

Between $1.51 and $2.00

15%

Over $2.00

20%

That way, they aren't getting paid if they don't sell, and its more fair because its based on the amount of customers they see. At least thats my opinion. I found the other way was paying out a lot of commission for someone who had an LPPA of $.50, which is bad.

Hope I made sense. Sometimes I don't.

Thank you both very much for your quick response. I certainly can see how that formula would work. I feel however in mine that a flat 5% may work out easier.

I should give a little rundown of my situation perhaps. I hate to say it and get bashed but I recently purchased a video store that has been in business for 17 years in a small town in Ohio. There is only 1 tanning facility that is combined with a hair/nail salon about 5 miles from me and they only offer 2 choices of beds both have 100 watt bulbs. My demographics are great with 95% white and about 19,000 people within a 5 mile radius.

The video store itself smelled terrible (due to smoke) so I painted everything, landlord replaced the carpet and I built 5 rooms with extra space and I now have 4 tanning beds almost ready to roll next week and have been working on this for 2 months. I hung LCD TV's on the walls and made it look modern and new although the store itself was doing well for the previous owner who is now 73 years old and ready to retire. I have very little invested and hope that my wife can earn a little money and have some fun.

I have recieved some much needed advice from Sunsally (Ann Noe) and George from Prosun (thanks for the demo report) as well as many others on the site.

Neal

[Din]

Good luck to you Neal.

When you are ready to introduce this new Tanning venture to your neighbourhood with a Grand Opening promotin. Drop us an email.

web: CHRONOS MARKETING: Full Color Postcards, Custom Plastic Gift Cards, Flyers, Business Cards, Pamphlets, Brochures, Posters, Logo Design, Corporate Identity, Door Hangers, Banners, Catalogs, Menus, Design, Print and more!

email: info@chronosmarketing.com

Dean.

[aeltiger]

I start my employees at $6/hour and they get 10% commission on all products (lotions, accessories, etc) that they sell. This includes packettes and bottles. They get paid weekly on their time and their commission comes at the end of the month. Been thinking about changing that though. JustTans23, I like your set-up! Do you pay commission weekly or monthly?

[Tanning Queen]

Paying a flat rate commission is fine but it should be higher than 5% to make them want to make money.

Check with your state to see what the min wage is. If your state is lower than Federal, you have to pay the higher amount.

Paying min wage with low commissions will get you the bottom of the barrel employees. You will have the chick who is on her cell all the time, smackin her gum when people come in and say, go to room #2.

You want sales people. It will cost you to make them happy but they will make you more in the end.

[JustTans23]

I pay it monthly, whoever has the best LPPA over the month also gets a $25 bonus, but they have to beat mine too

[Tanning Queen]

Aeltiger, Heads up!

You arent paying the federal min as of July 24 if you are only payin $6. It is now $6.55 and will be $7.25 on July 24, 2009.

Ohio is $7 now and $7.15 Jan 1, 2009 and $7.15 July 24, 2009.

[npeifer]

Originally Posted by Tanning Queen

Paying a flat rate commission is fine but it should be higher than 5% to make them want to make money.

Check with your state to see what the min wage is. If your state is lower than Federal, you have to pay the higher amount.

Paying min wage with low commissions will get you the bottom of the barrel employees. You will have the chick who is on her cell all the time, smackin her gum when people come in and say, go to room #2.

You want sales people. It will cost you to make them happy but they will make you more in the end.

I was considering 10% but the one local place that offers base level beds sells their lotins for very little over cost so I don't want to be a LOT higher than them.

I do completely understand the concept of not needing to be the cheapest around since I will offer the best product and experience.

[npeifer]

I also started another thread here:

Introducing myself

I am always open to comments and suggestions.

[Rob]

we do it a little different yet.

we have a step system

example:
Lotion retail price 0-$39.99 5%
$40-$59.99 7.5%
$60-and up 10%

[JeffK]

Originally Posted by Tanning Queen

Aeltiger, Heads up!

You arent paying the federal min as of July 24 if you are only payin $6. It is now $6.55 and will be $7.25 on July 24, 2009.

Ohio is $7 now and $7.15 Jan 1, 2009 and $7.15 July 24, 2009.

Ohio's minimum wage law only applies to companies that grossed more than $250,000 in their previous tax year.. otherwise the federal minimum wage laws apply..

[aeltiger]

TanningQueen, I am actually no longer paying $6...thats just where I started the current girls. They are all up to about $7 now. We always start at minimum wage, but haven't had anyone new start since the min wage law changed! Thanks for the info though!

[Mojave Tan]

We pay
10% on all products - lotions, packets, accessories, nail savers, etc.

20% on contracts

Once per month, so employees can look forward to a "bonus" check to spend.

[JustTans23]

Originally Posted by JeffK

Ohio's minimum wage law only applies to companies that grossed more than $250,000 in their previous tax year.. otherwise the federal minimum wage laws apply..

Is it like this in most states?

[npeifer]

Originally Posted by Mojave Tan

We pay
10% on all products - lotions, packets, accessories, nail savers, etc.

20% on contracts

Once per month, so employees can look forward to a "bonus" check to spend.

So by contracts are you saying "packages" like 10 tans for XXX amount ? Or EFT contract ?

Thanks

[Mojave Tan]

We pay on EFT contract for tanning and Mystic.
This encourages year around income for the salon. However, the employee is only paid on initial month of sign up.

[Tanning Queen]

Ok, I am confusing myself with the min wage thing now. What I have read before makes it seem we all are stuck paying it. The more I read into things now, it may not be so. Gonna revive the min wage thread and continue this over there so we dont hijack the thread too much.


But to comment on payin a base wage of $x and a commission. If you dont have a min wage standard that is like $725 or whatever the Federal min is, or are expempt cuz you dont have the income level, you might lose out on potential employees cuz you arent paying enough. Even tho you only have to pay the min, others (chain companies, big dept stores, etc) most likely DO pay the highest min. Most pay MORE than that. So you are competing with them to get a decent employee. And a good one will follow the money.

[Tanning Queen]

MOre on just Min wage over here:

Minimum wage increases