payment structure advise

Discussion in 'Growing and Managing a Business' started by Ishindar, Jul 2, 2013.

  1. Ishindar

    Ishindar
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    i would really appreciate some independent advise on a fair pay structure in this scenario

    john starts up a company. He produces an item and sells it online. he discovers he can buy the item from a supplier and then resell it making 100% profit after costs.
    this turns out to be a better option than making the item himself. John sells the item online with moderate success but hates this aspect of what he does and much prefers
    internet marketing. John asks his parents, would they be interested in making it a family business, they could start with generating leads and selling the item online.
    Johns parents both experiened professionals start work on sales and lead generation. Johns parents prove to be prolific sellers and sell a large amount of product.
    The item costs 100e per sale and is sold for 200e generating 100e per sale.

    john spends 10 hours a week administrating the sales generated by his parents. john spends a further 30 hours on business development and internet marketing.
    johns parents spend 50 hours a week generating sales, doing the accounts and helping with business decisions and strategy etc.

    the monthly profit breakdown is as follows....
    johns parents sales generate 8,000e profit per month.
    john generates 2,000 profit per month from internet marketing and business development.
    so combined profit is 10,000e per month.

    what is the fairest way to pay everyone?
     
  2. Ivana B.

    Ivana B.
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    well, this is a tough question. but going by affiliate marketing world, it is normal to pay those who bring in sales 50-75% - so maybe that can help you.

    Ivana
     
  3. Ishindar

    Ishindar
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    thank you. i would appreciate some more opinions...
     
  4. alicemenezes

    alicemenezes
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    John would get 50 and the rest distributed among the parents.
     
  5. platnumcn

    platnumcn
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    I dunno. I feel that initially, you need a lot of money to establish a business. So taking just 50 percent of the profit margin will not help your cause. You will have to consider the future expenses as well. I believe it would be best to opt for 60-70 percent in the beginning. With time, take it to 60 percent to yourself and 40 to the rest, but never more than that, which is the maximum. I believe that you should be best suited to save something for those bad times, which might come and haunt you.
     
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