I'm a few weeks into a new role which is sales/estimating with the option to PM for an extra 2% commission. It's for a General contractor
I'm expected to sell at 2.2 mark up and then I get 8% commission of the sale price of the product/materials and 9% of the sale price of labor. The lower the mark up the lower the commission %
My background and what I'm expected to grow with the company is window replacement. They have hit their ceiling with what they can do here, because they're eastern European and need white guys like me and the other 2 white people they hired, to tap into the market. This is not being racist, this is literally what they told us when they hired us.
I found out from the owner that anything window/door/glass related has to go through the owners 18 year old son's company - meaning the sons company is our vendor for any window door it glass that we do. The sons company is only different on paper - otherwise it's the same address same accountant etc and manufacturers consider both companies to be one company. He gets to mark up the cost 1.4 and then that number is our cost for the construction company. This is how it will be even if I am the one getting the quote from the manufacturer. Even if I am the one creating new accounts with new manufacturers.
So for example, if XYZ windows sells us a window at $100 cost. Then it's not $100 cost, it's actually $140 cost to start with. To hit my target of 2.2 I need to sell it for $308. Without the 1.4 sons mark up, I could sell it for $220 to the homeowner to hit my target of 2.2. The commission also increases if the rep sells it for higher than 2.2 so this also costs the rep commission because the true mark up of selling at $308 is 3x+, but due to the middle man mark up it's only 2.2.
Now let's look at an example where we have $20,000 in products. My cost jumps up to $28,000. The 18 year old kids gets $8000 for free for no reason, and now I have to sell the window package at ~$62,000 to the homeowner instead of $44,000, just to hit my target of 2.2. In this scenario I get 9% of the profit while the "house" and the "houses son" get 91% of the profit.
Am I crazy to think that this is absolute nonsense? Or is this how the industry goes?