Enjoy this scene from Cheers “Woody: Raise or Title?”
We laugh at Woody being duped. He went after the wrong prize, just like some agents when it comes to commissions.
Agents face this choice: Commission percentage or commission dollars?
You might think a higher commission percentage automatically means higher dollars, but slow down Woody: It ain’t necessarily so! Let’s do the math.
Example 1) Bond Amount: $1,000,000
Premium rate: 2% = $20,000
Commission Percentage: 30%
Commission Dollars: $6,000
Example 2) Bond Amount: $1,000,000
Premium rate: 2.5% = $25,000
Commission Percentage: 25%
Commission Dollars: $6,250
Interesting! A lower commission rate can yield higher commission dollars when the premium rate is higher. When the premium rate goes lower, the commission dollars drop even more. A 1% rate with a 30% commission yields only $3,000 commission!
What about sliding scales? At 30% commission, the 25/15/10 rate delivers only $4,050 in commission dollars.
OK so here’s the conclusion: Focus on commission percentage and you may end up being Senior Bartender like Woody. When calculating income, the bond rate makes you a winner!
Since 1979 FIA has been a dependable provider of Bid, Performance, Site and Subdivision Bonds. Call us with your next one.
Steve Golia, Marketing Mgr. 856-304-7348
FIA Surety / First Indemnity of America Insurance Company, Morris Plains, NJ
We are currently licensed in: NJ, PA, DE, MD, VA, NC, SC, WV, TN, FL, GA, AL, OK, TX
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