Does anyone use a car allowance for their sales staff, and if so, what kind of rate do you use? We are considering a rate of $75 per week plus $.15 per mile. Any thoughts?
(Business and Management Forum)
From contributor D:
I allow my salesman $100 a month in gas, whether they sell successfully or not. They drive their own cars, so all of their gas and car expenses are deductible. They get paid 10% commission and rarely have to resort to cold calling. I have never had a complaint from them about automotive expenditures. If they are selling as they should, then driving costs aren't a problem.
I would never buy or lease a vehicle for a sales rep. They will not usually take care of it, since it does not belong to them, and you are stuck with an extra vehicle and the associated expense if the rep leaves employment and you do not rehire immediately. Pay them a reasonable auto allowance and let them drive the auto of their choice. I recently wrote a sales compensation plan that paid the sales reps a higher auto allowance as their monthly gross sales volume increased. I know of other companies that pay sales reps an increased commission to include auto expense. If a sales rep sells an order to a retail or one time customer for a price over the quote, split the extra with the rep for bringing in the extra revenue. Do not allow your reps to add extra to your regular customers.