price will come down from outright criminal to simply outrageous.
Usually, if the company bases their commissions on a “PAR” then they and the salesman have agreed to split 50/50 whatever the salesman gets over “PAR.” There is supposed to be honor among thieves.
The “PAR” will be set at about 40% less than the “LIST” price. If the “LIST” price is, say, $10,000, then the “PAR” can be $6,000.
This “PAR” is what the company thinks the salesman will have to negotiate down to so that there will be a sale. Yes, the first price out of his mouth and the first price down on paper has little to do with what the customer might actually wind up paying.
The “money” difference between the price he tells you first and the price you finally pay could take you two or three hours to discover. And he will lie to you all the way down to that “PAR” price.
The salesman has a real problem. If he is using these sales methods then almost by definition he is working for crooks. If you realize that the actual cost of the product is about 25% of even the “PAR” and that half of that 25% is cost of the materials and the other half is the labor to put it in, you see that the salesman’s 12% is another big nick in the company’s total profit equation. He might get paid as much as what the product actually costs!
Did I just say that the salesman makes as much in commission as the product really costs wholesale? Yes, I did.
The companies do what they can to defraud the salesman. He fights back by “packing” the sale so that when the company screws him he still makes his 12%.
If the sale is made at $10,000 and PAR is $6,000 then the salesman will make his 12% of PAR plus half of the span between “PAR” and the sale. In the case of this hypothetical $10,000 sale he would make $720 commission on the $6,000 “PAR” plus half the rest — or $2,000 — for a total of $2,720. Making $2,720.00 for three or four hours work is not bad. It is this kind of infrequent victory that keeps the salesman going. And it takes a very special person to keep doing this.
But now, remember, he can “pack” the sale and that means he can size you up and try to sell it to you at over and above even the already outrageous list price. It happens. He has to be careful how far he goes, but if he’s careful then he can do it. Of course