Profitable Painter Podcast
Profitable Painter Podcast is a rich resource for anyone interested in starting, running, and scaling a professional painting business, offering valuable insights, strategies, and interviews with industry leaders. Through case studies and in-depth discussions, we deliver a vivid picture of the painting industry, with a disclaimer that any financial or tax information is general and not a substitute for professional advice.
Profitable Painter Podcast
Helping a $1.5M Painting Business with Sales Compensation Models
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In this video, we explore effective compensation strategies for painting business sales teams, including both door-to-door setters and closers. The discussion breaks down a tiered commission structure tied directly to gross profit, designed to incentivize high-value sales while ensuring company profitability. We also compare the pros and cons of offering a base salary versus a straight commission model to attract and retain top-tier talent capable of closing over $1 million in annual revenue.
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Keywords: painting business sales commission, sales compensation models, door to door setter pay, sales closer commission tiers, painting contractor gross profit, customer acquisition cost painting business, sales team base salary vs commission, incentivizing profitable sales.
This episode was originally recorded as a video for YouTube.
If you hear me say things like “in this video” or reference visuals, don’t worry —
the content still works perfectly in audio form.
And if you ever want to watch the video version, you can find it on the
Profitable Painter YouTube channel.
https://www.youtube.com/@BookkeepingForPainters
This episode was originally recorded as a video for YouTube.
If you hear me say things like “in this video” or reference visuals, don’t worry —
the content still works perfectly in audio form.
And if you ever want to watch the video version, you can find it on the
Profitable Painter YouTube channel.
https://www.youtube.com/@BookkeepingForPainters
Quick Setup And Goal
SPEAKER_02Hey, how are you?
SPEAKER_01Doing well, doing well. Cool. We we got about 20 minutes. You mind if we jump right in?
SPEAKER_02Yeah, I'll do.
SPEAKER_01All right, let's do it. All right, awesome. Cool. So I got your your question. Basically, wanted to talk through compensation models for sales team and setters.
SPEAKER_02Let's go.
SPEAKER_01Any any additional context there? For example, uh setters, do you mean door-to-door setters?
SPEAKER_02I guess sorry, we're having uh QuickBooks to drip jobs miscommunication right now. So I was like, crap. But I I guess that is what I was talking about. Just seeing as far as salesperson, I would like them no matter what, if they're getting leads from door to door or not. Just that compensation. I have one already. Just wanted to compare notes, I guess.
SPEAKER_01Gotcha. And I know you you just got a closer. You just hired a closer, right?
SPEAKER_02Yeah, I think we're bringing on two actually at this point. So wow. I don't know if I'm doing it at the same time. One of them I really wanted to bring on, and then and they paused for a moment. And so I hired somebody else, and then they're like, no, I want to come. We'll see. They're it's mostly commission, so it's not gotcha.
SPEAKER_01Cool. And is the is the intent for those salespeople to do both setting and closing, or one or the other?
SPEAKER_02I would like the salespeople to do lead generation on their own to go out and figure out stuff, but not as far as door to door goes.
SPEAKER_01So gotcha. So the the the the hires that you made are mostly gonna be doing closing, and then you're thinking about adding in some door-to-door setters as well. Got it. Cool. So we'll we start with setters. So I think from what I've seen, the folks that have really good door-to-door marketing is that they they have a really good compensation plan for their door-to-door people because it's the hard job buttons, folks at doors and getting nose over and over and over again. And so it's it takes a special type of person. And usually the
Paying Door-To-Door Setters
SPEAKER_01best people for this job are money motivated. So you want to have a really compelling compensation plan for those door-to-door people, but also protect yourself so that you're just not paying a lot of money for someone to do door-to-door and not get results. So I would say be willing to spend about 5% of whatever leads that they get that end up closing. Not they don't have to worry about closing. All they have to do is hit the lead, come in and set it. Are you gonna have them schedule right there at the door or I'd like to, yeah.
unknownYeah.
SPEAKER_02Okay.
SPEAKER_01So they would hit the lead, set it, and then if that lead closes, I would definitely be willing to pay 5% or maybe even more, but around 5% of that deal should go to that person. Now, you don't have to necessarily do all commission. You could do a mix of that, like an hourly rate plus a commission. But the the the key here is to be willing to pay a good chunk of the the overall job price to that person. Because if you think about it, if you had to go on Facebook and spend a bunch of money on Meta, you're probably gonna end up spending seven, eight, nine, even ten percent for a leak to close. So five percent, in my opinion, is a is a is a deal. And so I would even be open to paying more for results, but I think five percent is a pretty good starting point. Now, so so far I'll I'll go into like and split this up, but does that make sense?
SPEAKER_02Yeah, yeah. Oh, yeah, yeah, yeah. Okay.
SPEAKER_01So as far as the the split, you could do five percent commission straight. I think that's a little might be hard for the this, especially new setters, to to see how that might work for them. Usually giving some sort of hourly rate will be a good, a good show. You you have this hourly rate. If things go weird for a while, you do have at least $20, $25 per hour that you can make knocking on doors. And then on top of that, you get a commission of three percent. That might be the and and that should work out to about five percent overall.
SPEAKER_02If they're so what what would the the you said minimum wage for the rate?
SPEAKER_01You could do minimum wage. I was saying 20 20 bucks an hour.
SPEAKER_02Oh, sorry, I didn't I miss that part.
SPEAKER_0120 bucks an hour is a is a decent wage, and you just need to monitor it closely and probably have some sort of requirements for the amount of doors they knock and the amount of leads that they get over a period of time, so that they're just not like collecting a $20 an hour check for without getting results. But $20 per hour plus three percent commission or some something like that could make sense. Cool.
SPEAKER_02Go ahead.
SPEAKER_01I was gonna say any any thoughts or questions on that before we talk about closers.
SPEAKER_02Nope, I get that.
SPEAKER_01Cool. All right, so closers. You said five percent for a setter or door-to-door person allocated for a closer, we want to pay them a little bit more. Usually eight percent or so is the is the magic number here. And and just to put it in broader context, if you have if you're paying a setter
Closer Pay Benchmarks And CAC
SPEAKER_01five percent, and if you're paying a closer eight percent, that means your customer acquisition costs altogether would be 13%. And we would want your gross profit to be three times that amount. So if 13 times three is 39, so we want a minimum gross profit of 40, 40% gross profit at a minimum. Obviously, everything above that's great, but that would be the minimum. So that's that's kind of how the numbers work overall. But let's talk about closers specifically. So eight percent for what they close, you could go straight commission, but again, it it might be a little bit harder to sell that to uh to someone coming on board that's new. What I see work is you can provide the the the new person three options and say, hey, option one is that you do straight commission and it's you get eight percent of of what you close. And we're gonna talk about a tiered system too. Then option two would be a little bit of a base plus five percent of what you close, and then the third option is more of a base and and less of a percentage commission. The option one is mostly commission, there's more risk, but you have a higher earning potential. Then option three has a lower earning potential, but it's basically guaranteed money.
SPEAKER_02What would you say is a good base versus you said like percent on option two, and the base being what 10,000, 15,000?
SPEAKER_01So I would say the mix that usually works is something like 45k base, maybe three percent base commission. So you could do it either way. You either say you get 45, 40, 40-ish K base or 3% base commission. And then on top of that, you get a tiered system where if you sell a job that hits gross profit of 60%, you get 3.5% additional on top on top of that, your commission.
SPEAKER_02If you gross profit over
Tiered Commission Based On Gross Profit
SPEAKER_02what? I'm sorry, over 40% or 60%.
SPEAKER_0160% gross profit would be the high end. If they sell a job that hits 60% gross profit, and this would obviously require job costing. Yeah, but if they sell a job that hits 60% gross profit, they get 3.5 percentage commission additional on top of whatever their base commission is. So if you do 3% base commission for whatever they sell, they get 3% guaranteed. But then if they sell a 60% gross profit job, they get an additional 3.5. So now they're at 6.5% commission for that job.
SPEAKER_02Oh, an extra 3.5 on top of the three. Oh, okay. Okay, yeah. Anything over 60%.
SPEAKER_01Right. 60% gross profit. Then another the next year would be 2.5%. So that would be 55% gross profit. If they sell a job that hits 55% gross profit, they get two and a half percent commission on top of the three percent base. So that's five and a half percent commission.
SPEAKER_02And then that would still be 55 gross percent gross profit. Um two point five, you said right, two point five extra. Yeah, and that would that still would follow the 45k base.
SPEAKER_01So uh either 45k or a three percent base commission. You could go either way with that. Um, you know, the this would be around 45k if they hit 1.5 million in sales, which is usually what a closer can close. Um, so you could you could go either way, you could do a 45k base or a 3% commission base, meaning whatever they close, they get 3%, no matter where it comes on the gross profit. Does that make sense?
SPEAKER_02Yeah, um, sorry. I thought it was 40 like a 40 to 45,000 base plus a 3% commission.
SPEAKER_01You yes, it is for if the okay, so there's there's two options for the base. You could either do a a straight salary base, like 45k, or you could do a commission base, meaning you get three percent commission for whatever you close doesn't matter the gross profit. So those are the that's one option there to go with dollar amount base or commission percentage base. Then the um the thing that we're adding is the tiers, the tiers there, one to tier one, tier two, tier three, based off of the gross profit, which adds on the on the compensation. So the 60% gross profit is the first tier. If they hit that, if the job comes in at 60% gross profit or higher, they get three additional percentage commission on top of either the 45k base or the the three three percent base. So they could get up to six and a half percent commission if they have the three percent uh base commission because it's adding that to half percent, or they get 45k base salary plus that three and a half commission for that job specifically.
SPEAKER_02Okay, I'm sorry, yeah.
SPEAKER_01So it's just options.
SPEAKER_02So no, I get I get the option thing. I get uh I get getting an extra three percent, yeah, or or two point five percent, yeah, based off the gross profit. I just I'm sorry, I'm sorry, you're getting no matter what, and a four forty-five thousand dollars no matter what.
SPEAKER_01It's either or so if you feel more comfortable just paying, just saying, hey, get forty-five thousand dollar base salary, you could just go with that. If you and that's a little bit more risky for you, but if you feel confident in the person to pay a 45k salary, that's you know, if you if you have confidence in them to to deliver still. Um, some folks feel less confident, you know, they don't want to pay that base salary untested. So they'll just say, hey, you get a 3% base commission. So whatever you sell, you get 3% off of that. Um so that that's the first, like whichever way you want to do it. Do you have a way you're leaning? Do you want to give a dollar amount base or do you want to give a commission base?
SPEAKER_02I was thinking a mixed okay. Yeah, right.
SPEAKER_01So that the base, but then we're gonna have tiers as well. So it's kind of a two-part um formula here. So let's let's go with the dollar base. Let's just say it's $45,000 base. They get $45,000 per year when they work with you, right? Then you add on the the tiers that we're talking about. So you have a six sixty percent gross profit, fifty-five percent gross profit, and fifty percent gross profit. So those three tiers, when they sell work that hits sixty percent gross profit, they get a three and a half percent commission in addition to their base salary. Uh, if they hit 55% gross profit, they get a two and a half percent uh commission on top of the base salary. And then if they hit 50% gross profit on a job, they get one and a half percent commission on top of their base salary.
SPEAKER_02So it's the I get it now. Okay, okay, okay, okay, I gotcha.
SPEAKER_01Cool. Um, so that that works because it's doing a couple things. One, you they their dial rate is gives them stability, right? If when they're going through the slow, the slow season, they still have that base salary to fall back on. But then a lot of their potential compensation is tied to gross profit, basically to half half of their compensation, it could be tied to these gross profit commissions. And you're not just you're not providing a commission based off of just what they sell, but the actual profitability of the job. So this you know prevents them from just discounting work to get more sales because they do they're only getting that commission of three and a half, two and a half, or one and a half percent if they are closing profitable jobs.
SPEAKER_02Okay. Or option one, eight percent.
SPEAKER_01Yeah, you could do you could do straight commission. Uh yeah. I would I would actually say is what we want to see on the profit and loss. So, but the profit and loss will show uh payroll taxes and a little bit of workers' comp as well. So really you would want to be compensated at about six and a half percent is what they get, but then on the
Real Cost After Taxes And Wrap
SPEAKER_01payroll taxes and the workers comp is gonna end up being eight percent when we look at on the profit and loss. So I would say if you were to go straight commission, I would say six and a half percent commission would be what I would recommend. So it so when it ends up on the profit and loss with the payroll taxes and all that, it ends up being eight. Okay. Or at least the cost to you.
SPEAKER_00Yes.
SPEAKER_01All right, cool, cool.
SPEAKER_00Thanks.
SPEAKER_01Any uh any other uh thoughts or questions on comp plans for salespeople?
SPEAKER_02Um, no, not really. No, I like the uh the system of doing it by gross profit, though. Yeah, 3.5, 2.5, 1.5.
SPEAKER_01Correct, exactly. Yep. And so their their maximum comp would be somewhere around a hundred thousand dollars. That in a a good salesperson should want to make six six figures. So when you're structuring this comp plan, try to make sure that they're comped at least at least six figures uh when they're performing at a high level.
SPEAKER_02Um that would be did you say that come like probably comes around between one one and one point five if that kind of right.
SPEAKER_01So usually a closer can close 1.5 million if they're good at what they do and they're consistent. Yeah, so 1.5 is you know roughly a a good benchmark to kind of go off of. So if now we say the example of 60, six, 55, and 50 requires a certain amount of markup on your on your work tinge to allow them to even hit 60 uh gross profit. So that's something to consider that to ensure your markup is set up and in uh drip jobs appropriately, so you're actually giving them the ability to um to hit that 60 gross profit.
SPEAKER_02Yeah, totally. Cool. Well, yeah, I think I only had 20 minutes.
SPEAKER_01So absolutely cool. Well, I appreciate your time. Have a good one.
SPEAKER_02Yeah, yeah, yeah. Appreciate it.
unknownBye.
