Sales bonus calculations can be handled as any other cost is handled in the Millworx Job Costing Item Module. Adding COS to your quoting process can be a very affective method of incentive for direct sales people and for controlling the COS within the product sales process. Including the COS in the Job quote will improve profitability because the bonus calculation is built into the quote as cost and included in the sales price and part of the profit. If you pay a bonus calculation as a percentage of the gross sales amount, you could be paying sales bonus despite the cost and profitability of each job.

 

Specific Sales Compensation Plan rules, GP targets % and thresholds must be developed that establish the percent of the profit on Jobs that meet the Company's Target GP%. For example, if the Company's Target GP% is 15%, then the Sales Person bonus might be established at 25% of the GP amount. Otherwise, if the net GP Target % is below the requirement, but the Job is approved by the company, then the Sales Person bonus might be paid at a higher percentage.

 

commission1

 

In the Use MFG Code quote example image above a product from an item list price is quoted. A $20.00 picking and delivery charge each is added, which makes the total sale without the cost of sales (COS) $840.00. The Gross Profit (true cost are not shown here) is at 95.24%.

 

The sales rep will be paid 10% of the Gross Profit, so the image below is shown with $80.00 added to the COS field.

 

commission2

The cost is increased to $120.00 and the Sell Price goes to $920.00 because the Sell Price Each was increased from $8.40 to $9.20.

 

In the Square Feet, Use Sell Price Each example image below the Target GP% is set to 15 and the Company must maintain that line, despite the cost and the additional requirement to pay its sales person 25% of the profit.

 

commission3

 

In the next example image 25% of the GP amount of $483.15, or 120.79 is added to the COS field.

 

commission4

The Sell Price is increased to $3,363.11, the Total Cost is $2,858.64, the COS is 3.59% of the Sell Price and the GP amount is increased to $504.47. The new Sell Price is derived by adding the Total Cost + GP amount = $3,363.11.

 

In the next example image the Entered Sell Price method is used with the previous quote example instead of a set Target GP%. The Sales Person is of the belief that the company can't get the business unless the price per Square Foot is $6.36 instead of $6.44 in the previous example.

 

commission5

The margin is reduced to 10.43% because of the reduction in the Sell Price to $6.36. The COS is 3.48% of the Sell Price or $110.54.

 


 

 

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