Mike Andes explains why commission-only pay pushes estimators toward low-margin jobs that are easy to close. He recommends profit-sharing instead, so estimators chase higher-margin work, use discounts sparingly, and keep crews busy.
Actually, now as an estimator, I might work a little bit harder to close a job that I know is higher margin than one that's lower margin, lower ticket, and an easier sell because I know I'm also getting a piece of the profit that I'm selling for the business. And that was a balance that we struck is that yes, there should be some commission elements of like, hey, the volume that you do, the close ratio that you're hitting, like, yes, we want to incentivize that from a sales perspective, but we also need the business to be successful long term. And that means bottom line profit. So I would recommend kind of based on the way you paid me is like give your estimator a piece of the bottom line profit. That way you know that when they're offering discounts to customers, they're only doing that when they have to. That way, you know, when they're working the extra hours to close high margin jobs, they're doing it because they're incentivized to do it. And you should be happy that they're trying to close those jobs.
And they understand the balance between like keeping the crew busy.
Yes.
And not letting the truck sit idle, but also making sure it's high enough revenue and margin to where there's profit sharing at the end of the day.
