View Full Version : Brokerage Commissions
03-16-2006, 12:19 PM
Good day my friends. I am currently acting as a broker for a unique beverage offering. I am new to this and would greatly appreciate any guidance that you may be able to share with me. In particular, I am curious as to the appropriate percentage commission for different levels of beverage sales. I have extensive contacts to large grocery chains throughout the U.S. and have already been receiving very favorable feedback from them. The manufacturer has asked me to agree to a percentage of 5% on all sales that I am able to generate. Is this an adequate amount or should I hold out for more? I fear that my little bargaining power as a small distributor will put me in an awkward place, however my significant contacts could yield very favorable results for the company.
Thanks you for reading and any help would be greatly appreciated.
5% in my opinion is a fair commission. The kicker is for how long that 5% is good for. Is it for initial stocking? Is it for one year, is it for the life of the product?
What are your gaurantees as far as a safety net for you? You have to protect yourself against unscrupulous manaufactures. Say you get the product in 2 chains with 500 stores each. Sales take off and the manufacturer decides his sales team can take over so they do not need your representation anymore. How much money would you be out?
So, I think 5% is fair as long as you have some protection and longevity.
03-16-2006, 04:14 PM
Thank you for your reply. For any of these brokerage deals we are being offered 5%. This is for a 12 month (1 year time frame). We felt the normal frame was from 5-10%. Is common industry standards to request a greater % for larger dollar volume sales, an inverse %, or a flat fee as we have been offered. Our worry was also in regards to the longevity protection and we are working towards negotiating such an agreement. Thank you again
Always ask for more than you really want.
Furthermore, Build in hurdles for a point or half point increase. Example: If you are at 5% ask for another 1/2 point at 150k cases sold, another half at 300k and so forth. They may balk at this and then you can say you will take only the 1/2 point on the product above the hurdle while maintaining the 5% on total cases. so you will get 5% on all cases plus the 1/2 point on everything above the 150, 300 etc.