What is a reasonable compensation for doing lighting audits?

April 9, 2010 3:56 PM

What is typical compensation for doing lighting audits?

Their offer is commission only - 10% of the total project cost minus recycling fees and taxes. I would be working as an independent contractor for a company whose principal business is lighting efficiency. I have some energy experience, but I've never done lighting audits before. My role is to find leads/clients, do the audits, write up the proposals. I'm having a hard time finding what "typical" sales compensation is for different industries, let alone for lighting/energy audits.

posted by anonymous to Work & Money (2 answers total)

It sounds to me that what you're being offered is a 100% straight sales commission job, in industrial sales. Such jobs typically pay from 5% to 25% commission, depending on the amount of pre-sales and post-sales work, and expense, that a salesperson is expected to provide (i.e. if you provide your own car, cover your own travel expense, communications, provide your own health and disability insurance, set your own work hours, and days of work, etc.) In the U.S., you'd have to pass typical IRS rules for independent contractors, and be paid on a 1099, to work this way, so you'd also have to cover entirely your own self-employment tax, and withholding, plus whatever state and local self-employment or business taxes are applicable for independent contractors.

I can't tell you whether 10% is a "typical" rate for that particular kind of sales job, because that is partly a function of product margins in that industry, and whether you'd also be quoting labor and other services as part of your total projects. But if you expected to clear, say $40,000 pre-tax (and had $20,000 worth of business expenses/health & disability insurance costs and local taxes annually, in a single metropolitan area you covered by car, with no overnight travel), that implies you'd be selling $600,000 worth of "projects" per year, and you'd be netting around $32,000 to $35,000 with typical single person deductions. To get to a more liveable $80,000 a year pre-tax, with the same expense and benefit costs, you'll need to punch out $1,000,000 a year at that commission rate.

If your typical customers are large warehouse and office operators, you're going to be selling thousands of lighting fixtures, and hundreds of man-hours of installation work, to meet the sales numbers at the top of that range. Probably doable for an established sales professional in a large U.S. metropolitan area, if your product lines are good, and your product costs are reasonable. Not so easy if your territory is Western Wyoming. But, as an independent contractor, you might be free to add additional non-competitive product lines like security cameras or warehouse inventory control products, to your lighting line. If you don't get too spread out in your focus, having 3 or 4 product lines to sell can help you make a large territory profitable, by increasing your opportunities to sell on each call, thus lowering, on average, your variable expense per sale. I have an old friend who has had a very successful business selling about 10 lines of electrical test equipment to manufacturers, electrical utilities, electricians and facilities maintenance businesses, for more than 30 years.
posted by paulsc at 10:44 PM on April 9, 2010

I have some friends who have a company like that in San Francisco. In the past, I believe they've offered 20% commission. It is indeed a straight sales job, but the sale is pretty easy because the savings for the customer is a no brainer given energy savings over time.
posted by paddingtonb at 8:25 AM on April 10, 2010