Haus Advisors

The Commission Math That Quietly Destroys Margins

Paying sales a cut of the whole invoice instead of the profit can quietly cost you twice as much for the same rate.

Chart: The Commission Math That Quietly Destroys Margins. Paying sales a cut of the whole invoice instead of the profit can quietly cost you twice as much for the same rate.
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The mechanism

The chart uses two sets of bars. On the left, a $120K deal shrinks to $60K of real profit after the costs of doing the work. On the right, a 5 percent cut of the full $120K is $6,000, but the same 5 percent of the $60K of profit is only $3,000. Same rate, double the cost, and the extra leaks out unnoticed on every deal.

Part of Persistence. Infrastructure that keeps growth compounding past founder heroics.