A sales coach explains above the line and below the line costings so you can negotiate commissions that actually work for your business. Know your numbers before you agree to anything.
So for all you sales guys out there that are looking to get 10, 20, 30, 40, 50% commissions, okay, thinking you should get paid more and more. Just want to have a quick explainer to you about what above the line and below the line costings actually looks like. So you got the line here, okay. Probably can't see it, but I will. Right? And you've got above the line costings. It's just everything it costs to make the sale. And then below that is all like the delivery but also somewhat discretionary spending that a business can do, right? So you can have the difference between your gross profit, your net profit, okay? The gross profitability of a business is going to determine the scalability and model of that business, right? So if you come in and you want 20% top line, okay, that means that from $100, 80 of it is left over. So now we have a 20% down and let's say it costs another 20% to get that client in, right? Just from marketing and all the kind of things that are going to be involved there. So now we have, now we have 60 leftover. So now we have a gross profitability essentially of 60. Now that's not super scalable, especially for like coaching businesses, for example. So if you're selling in the coaching consulting space, just front end front ends want to be around 70%. Okay? So if you want to be on an account long term, okay, if you want to have a long term relationship with your business owner and with the person that you're doing sales for, because you enjoy doing sales for them, you need to have an understanding of what those numbers are because what you want to do is you want to get the highest level of commission possible which whilst maintaining a profitable front end so the business can scale. Otherwise you're going to be in a position where they hit a ceiling and they can't go any further because the business model is somewhat broken. So they either have to get a cheaper sales team in or have the conversation with you to reduce their commissions, which is hyper demotivating or they have to figure out some way to get much cheaper leads. So all these conversations are a little bit awkward. Some of the things are super hard to do. So it's always good for you to have an understanding and have an open conversation about the gross profitability or cogs of the business that you're going into so you can have an understanding of how and why you should be paid commissions in the way that you are.
