Is % Pay Fair When no Additional Work is Needed? (Flat Rate vs %)

Bal4 · January 19, 2016

I'm hoping to hire someone as the busy season starts to roll in. But i have been thinking about this certain aspect: if i choose to pay a percentage.

If it takes the same amount of time & effort to complete a car with film A. which costs $$ that it does to complete a car with film B. which that costs $$$ shouldn't the labor rate be the same?

If i have an employee/contractor who does no sales should they make more money for doing the same amount of work just because the product I sold the customer is more expensive?

Wouldn't a FAIR fixed rate based on the type of car being worked on be more fair. (for both the employee and owner)

I should add that this makes even more sense when you factor in that profit margin isn't the same on all products. Usually the more expensive the product the lower the profit margin and this is before you add in labor cost(i'm talking about profit margin not profit)

it is possible to end up loosing money in certain markets. Not all markets can charge super high rates but the the manufactures don't reduce the cost of film in those markets to account for this. As a result when a shop in one of these markets prices their products, the margins on their most expensive product isn't ans high as their lower end products.

There is a shop near me that charges like this for products: A= $169, B= $239, C= $279, & D=$319. (i also know the cost of the film they use) based on the profit margin they only make $12 more on their most expensive film than they do on product C.

If they are paying an installer a percentage of 35% it would be A= $59.15, B= $83.65, C= $97.65, D= $111.65. the difference in labor between C & D is $14. So even though D sells for more they now make $2 less selling D than they would selling C.

Labor cost is one of the most important factors any business should seek to control. They should be as close to fixed as possible. A percentage makes them variable and unpredictable

So to sum it all up wouldn't it be more fair and make more sense to pay a FAIR flat rate based to the type of vehicle or per window if the amount of time and effort to do the job doesn't change?

TTS · January 19, 2016

Good post and yes.. I concur sir ! :thumb

Bal4 · January 19, 2016

Good post and yes.. I concur sir !

Thank you.

And thanks for the response. After 39 view w/o a response i was beginning to think no one had an opinion

Bham · January 19, 2016

Yes,, good post Bal4. I like the flat rate idea also because it takes " the deal " out of the equation also. Percentage cuts into the installer's pocket if the sales counter cuts a deal. A lot of time the installer doesn't even know he's getting jipped unless he sees the final invoice.

My question is are you going to do a flat salary plus rate? Or a salary VS commision type thing (whichever is greater?)

Bal4 · January 19, 2016

Yes,, good post Bal4. I like the flat rate idea also because it takes " the deal " out of the equation also. Percentage cuts into the installer's pocket if the sales counter cuts a deal. A lot of time the installer doesn't even know he's getting jipped unless he sees the final invoice.

My question is are you going to do a flat salary plus rate? Or a salary VS commision type thing (whichever is greater?)

I didn't elaborate on this, but i did mention fairness to both installer and owner. This does factor in fairness for the installer if you are shop that does a lot of dealer work at wholesale cost then your installer suffers if you do a percentage. They perform the same work. it is a tough line once you start doing a lot of dealer work because now your profit margin goes down.

I think what i would do is a flat rate based on cost/glass - each door has a value and the back glass has a value. this would be the only fair way to do it if you have installers team tint.

its not fair if you installers split the percentage 50/50 if you have one installer who is quicker that ends up doing the majority of a car.

this also motivates the installer to become better and faster. because their income is tied to their performance. this method also allows you to track who did which window so that if there is a return the installer who did that window is responsible for fixing it.

I would also not be apposed to a bonus based on the overall performance of the shop and the individual performance and contribution of each member of the team.

Bal4 · January 19, 2016

if you did want to do percentage. it would make more sense to do it based on margin rather that sales price. this keeps commissions proportionate.

My entire professional career has been in sales until in got into window tinting. I've spent a lot of time evaluating commissions structures and even creating a few.

In most industries sales people are the only people in a corporation who are commission based. This is because if you are paying them more it is because they added revenue to your company.

I would be willing to entertain a bonus if the installer directly influenced the customers decision to upgrade. At this point the installer deserves to be compensated.

Bham · January 19, 2016

It is a tough road when you try to start compensating everyone for everything. There does have to be some sort of line drawn to determine who is getting compensation for the upsell.

As for the bonus thing... I love the idea of the " No Return " bonuses for the individuals and the teams. I think it could be worked out on a quarterly for the individual and a semi-annual for the teams. Just my thoughts on that. :twocents

You are getting into a lot of keeping track, which can get tedious at times. Also beware of the arguments as to what each piece is worth. Individual talent and opinion on difficulty will create arguments. More lines to be drawn there also.

Bal4 · January 19, 2016

You are getting into a lot of keeping track, which can get tedious at times. Also beware of the arguments as to what each piece is worth. Individual talent and opinion on difficulty will create arguments. More lines to be drawn there also.

Yes there is a lot of keeping track but that is not a bad thing. With every company where I was a Sales Exec i had to agree to and sign the commissions structure agreement. I also had to re sign when if the structure was adjusted.

This is will help to eliminate arguments.

Bham · January 19, 2016

Well, I hope you get it all worked out and can successfully add a tinter. :cool

Of course, as you said, KEEP IT FAIR!! and try to keep everything up front and concrete. Good Luck :beer

Ocala · January 19, 2016

Aren't the more expensive films usually slightly harder to work with? So why wouldn't an installer be entitled to getting paid more for having to deal with a film that is harder to work with and is going to take more time to install "properly" compared to a cheaper film that "cheap" folks might choose compared to someone with a higher end car wanting the so-called "best" and is willing to pay for a premium product and installation?