Commissions VS product sales ratio

[Joel OF]

Just curious what sort of ratio folks strike between bespoke commission work VS product sales?

I.e does 50% of your income come from products and 50% from commissions? Do you only work on commissions and 100% of your income is earnt that way? Do you make all your money from products alone and just do the odd commission for sake of mental stimulation, even if you only break even?

[Frosty]

That is going to vary so widely between markets, product lines and smiths I don't know if any answer will be meaningful unless you're just looking at statistical averages.

Frosty The Lucky.

[rockstar.esq]

What Frosty said.

[Joel OF]

Fair dos, I wasn't hoping to structure my business plan for the next 5 years from people's answers, just curious I guess. I appreciate that location is a massive factor if you're mainly taking commissions from local clients or only selling products at local markets, but the big common demoninator nowadays is online shopping which, (as long as the customer is willing to pay the postage), kinda renders your location meaningless. I've had mail order enquiries from people in England as well as America for my rams head pokers - which I posted a pic of on Twitter.

Edited October 29, 2015 by Joel OF

[rockstar.esq]

Joel,

I completely understand where you're coming from.  This is a simple question that takes an incredible amount of knowledge to answer for even the most specific application.  I'm a professional estimator and I can tell you that the "going rate" for any given thing is both remarkably consistent, and remarkably variable.  By that I mean that the price changes over time, but competition is so fierce that there's very little difference between market leading estimators on any particular bid.  I regularly win or lose by less than 3% against half a dozen competitors.

Your comment is well timed to relate to what I'm facing in business right now.  All year we've been going strong working for good clients who pay their bills.  Heading into 4th quarter we looked a bit lean which we tried to counter by seeking out projects that would start in those months.

In the last four months we've seen everything we had won get put off until next year.  Everything that's bidding currently is either supposed to start in 1st Quarter or it's a lying client.  Nothing, and I do mean nothing is starting between now and January.

Every competitor is facing the same situation, so layoffs are likely.  This holiday season will be brutal.  Then everything is supposed to resume to normal in 2016.

I speculate that the finance sector put a stop to all new construction loans for 4th quarter.  I don't know why or what they're waiting for, but I'm  hard pressed to find any other commonality that would cause the entire regions new work to stop so uniformly.

I dearly hope they aren't looking for holiday spending trends to make their decision.  Being out of work will doubtlessly have a major impact there.

I wrote all of this to point out that if you were to google construction trends for 4th quarter 2015 you'll find good news.  In fact, the only way you EVER find out that something is in a down market, is AFTER it's improved.  None, absolutely none of the trade journals, newspapers, or media find it newsworthy to provide timely warnings of impending market declines unless they're trying to affect an election.

Sure we hear about the stock market and somehow it's tied to your everyday existence as a business, but how often, truly, how often does a stock report have any serious impact on your operation?  I work as an estimator and monitoring the local market is a substantial part of my job.  It's virtually impossible to find any reliable sources of intelligence to base your operation on when things are tight.  When things are booming, there's tons of successful people who have no idea what things they're doing right, or wrong.

I read articles interviewing local business "experts" that claim to have figured something out.  From personal experience, I can tell you that is never the case.  Being in the right place, at the right time, makes more difference in your odds of success than any degree of hard work, ethics, or intelligence.  Despite all the highfalutin talk, innovation is a rare thing in business.  We're mostly squirrels trying to get a nut.

The internet marketplace seems like a place of uniform opportunity.  After all, you can sell to whatever market is up, wherever it is in the world.  Unfortunately it's a full time job just trying to get your site to be visible on the 1st page for search engine results.  Even then, absolutely nothing is guaranteed beyond "window shopping" and the inevitable spamming.

Many start-ups fail because they didn't have a buying market for their product (or service) when they started. Moreover, they didn't have deep knowledge of that market's trends and influencing factors. 

As an estimator I'd love to win more work right now.  I can't bid fast or low enough to create more paying clients.  My competitors are blaming one another for "giving work away" without seeing that the work isn't actually happening.  Doubtlessly some idiotic trade journal will report on this three months from now and mention an uptick in bidding as though it's a positive trend.

Every time I talk to a competitor they're always positive about the market, yet we can't hire more tradesman because we can't meet the wages of other vocations.  If the market was so good, we'd be able to afford higher wages.  It's a lie that everyone tells themselves to feel better about their future.  Is it any wonder there's no market for articles that pop that bubble?

Sorry to be a downer, but I think there's only two ways you'll get your questions answered, either you take the plunge and live with what comes, or you work for a direct competitor to see how it's done.  "What's the market for this?" is the estimators equivalent of asking a smith what their hammer should feel like when forging.

[Joel OF]

 

The internet marketplace seems like a place of uniform opportunity.  After all, you can sell to whatever market is up, wherever it is in the world.  Unfortunately it's a full time job just trying to get your site to be visible on the 1st page for search engine results.

Ha, yes. I was recently mulling over shifting the focus of my business from local commissions to internet based product selling, but then the thought of all those hours I'd have to spend on social media being narcissistic whilst developing A.D.D from "feeds" and "Likes" and "shares" alerts strobing in my eyes like one of those crazy Japanese cartoons that give children epileptic fits kinda put me off.

[tzonoqua]

Hi Joel, it's really difficult to predict these things, for me, this year my sculpture work at shows has been largest percentage, followed by online sales and commission work in equal portions, then gallery/shop sales and markets. Last year, it was commissions followed by gallery/shop sales and then sculpture shows and then markets, then online sales...  With the varied work that I do everything can change with one really good commission or sale... it's kind of like asking how long is a piece of string.. the trick is just to keep on working and focusing on markets that are working for you. If money didn't matter I'd just be making self indulgent sculpture all day long.. however, there is rent to pay and kids to feed so I do whatever pays. Hope that helps.

[rockstar.esq]

Joel, You've done a great job of describing modern marketing.