Mikez76sp Posted July 8, 2016 Share Posted July 8, 2016 How do you guys calculate net profit for commission purposes. It seems very time consuming. I have an account that wants net profit vs gross. Is there a industry trick to get net off of gross instead of figuring out all costs I incurred. Thank you Link to comment Share on other sites More sharing options...
TKK Posted July 8, 2016 Share Posted July 8, 2016 Just pay it off the gross. Dont give them the option to see both, they dont need to know what you make and keep etc. Just how much sales they get. If they have to have off net then calculate your net and round it off. Say u keep 65% then there u go... Link to comment Share on other sites More sharing options...
AZVendor Posted July 8, 2016 Share Posted July 8, 2016 Subtract your cost of goods, depreciation and service labor or other overhead. What's left is profit. Paying a percentage of profit saves you money but is cumbersome and might lead an account to assume you're getting rich though we all know that isn't possible in vending. Actually, there isn't anything to keep bystanders from thinking your "raking it in" by running a vending company. All they see is the money come out; they don't see what it takes to run the company. Worrying about the account's perception is fruitless. Make up a number and pay them from it. Link to comment Share on other sites More sharing options...
Southeast Treats Posted July 8, 2016 Share Posted July 8, 2016 I agree that commission on gross sales is a better method but accounts always think they know better.... I wouldn't worry about working out gross profit per machine or location, I would look at my average numbers and take a figure from that. 65% cost of good sold is probably close to average in the industry; so your commission number would be based on 35% of total sales. Don't forget to deduct any sales tax from sales before computing commissions as well... and don't give up a big number out of gross or you will never cover your overhead.... Link to comment Share on other sites More sharing options...
Mikez76sp Posted July 14, 2016 Author Share Posted July 14, 2016 Thanks guys appreciate feedback. My problem is my locator negotiated net commission so I will have try and figure something out. Thanks again, Mike Link to comment Share on other sites More sharing options...
joshnosh Posted July 15, 2016 Share Posted July 15, 2016 Gross sales MINUS Sales Tax MINUS Cost of Goods Sold = Net Sales I use 55% for COGS. No customer has ever questioned this. Link to comment Share on other sites More sharing options...
Poplady1 Posted July 15, 2016 Share Posted July 15, 2016 Whatever formula you use I would try to always use it on any commission account. If you happen to be audited by your Sales Tax department they will want to know how you arrived at those amounts. During my 25 years run we just used 50% of sales (cost of product plus 5% Misc) and we paid on 45% of sales. If they ask for a full report we explained they would receive a 1099 if it was over $600 for the year. Normally they were happy with that and of course, it rarely was it over $600. Link to comment Share on other sites More sharing options...
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