- an ideal "work-from-home" solution

Winter, 2011


“Will home improvement contractors pay a commission?”

This is one of the most frequently asked questions by people interested in starting a Homeowner Referral Network (HRN) business and the answer is:


Good contractors (who are good businessmen) know the value of a good job lead. They know how important it is to continually expand their client base and to stay busy during their slow seasons. But you don’t have to take my word for it.

I recently read an article in daily 5 remodel (one of my favorite industry newsletters!) entitled “Solutions: Hiring A Salesperson” and several prominent industry gurus weighed in on the subject of how to compensate home improvement salespeople.

Here’s what two of them had to say:


I firmly believe that paying a salesperson with a salary, by the hour, or with a base plus commission is a mistake. It gives salespeople a reason to stay in bed in the morning.

If you want salespeople to produce, pay them by commission, with a percent of total sales.

I believe that 8% of the total sales price with the potential of up to 4% more as bonuses for a job well done is reasonable. I have many coaching clients across the U.S. and Canada who use that with success.

-Michael Stone, Author
Markup and Profit: a Contractor’s Guide and Profitable Sales, A Contractor's Guide
How much gross percentage to pay the salesperson? That is up to you, but it cannot be so high that it reduces the dollars the company needs to earn to cover overhead expenses and generate net profit.

When to pay the salesperson? Consider paying one-third of the commission when the contract is signed, one-third when the job is completed/done and the final payment is received from the client, and one-third when all the trade contractor and supplier invoices have been received and paid. That way, the salesperson has a stake in the outcome will also keep the salesperson interacting with the client after the sale is made.

- Paul Winans, Consultant
Remodelers Advantage

As you can see, paying a commission to salespeople is common practice in the home improvement industry. And, outsourcing sales to an HRN is an ideal solution for home improvement business owners who can’t hire a full-time salesperson or who prefer not to handle this aspect of their business on their own.

If you’re still considering the launch of an HRN and would like additional information, please let me know.



3/11 - Renovations, Remodels & Referrals
2/11 - Will Home Improvement Contractors Pay a Commission?
1/11 - Reinventing Your Career
11/10 - HRN Success Story
6/10 - Financing a New Business
5/10 - Busy Home Improvement Season
4/10 - Tax tips
3/10 - Your Way To Work At Home
2/10 - HRN Operating Costs
1/10 - Tips for Success
12/09 - HRN Success Story
10/09 - Work at Home Resources
9/09 - Running Your Business On The Go!
7/09 - Opportunity In Your own Backyard
6/09 - Starting a Home-based Business
5/09 - Finding the Right Home Business
4/09 - Good News
3/09 - HRN Success Story
2/09 - Pitfalls of Working From Home
1/09 Home Improvement Spending Increases
Winter 2009 - Recession Proof Business
Fall 2008 - What's in a Name?
Summer 2008 - Typical Day for an HRN Owner
Spring 2008 - Value of Prescreened Professionals
Winter 2007 - Top Ten Home Based Businesses
Fall 2007 - Finding Good Contractors
June 2007 - Misconceptions About HRN Business
Winter 2007 - Home-based Business Self Evaluation
Fall 2006 - HRN Business Fills a Contractor Need

For more information about starting a Homeowner Referral Network in your area, you may:

Fill out our online form to request more information. Or, call Debra Cohen at (516) 374-8504.

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