Feel like it's time to talk seriously about going 1099/distributorship model. The numbers below need some input, so please feel free to add to, or replace my methodology. Here we go....
According to people I've heard talk about it, the Exogen unit costs around $45 - $120. Taking the average we come up with $45 + $120 = $165/2 = best case guess of $82.50 for an Exogen unit. Average reimbursement is $2,900 which is $2,817.50 of gross profit per unit. (Or another way of looking at it is a percentage increase of 3415.151%)
How much does it cost to sell one unit? (Net profit)
There are fixed variables involved outside of the sales department which include things like internal reimbursement and patient assist, along with customer service, shipping, etc. I think you get the point. What percentage of the gross profit represents the "cost of goods sold" outside of the sales force? Not sure, however, we can focus on the sales force to perhaps better understand how Bioventus and EW are literally throwing millions of dollars away annually by continuing the current sales model. Below is my "best guess" as to the expenditures that correlate to us, the sales department.
Average sales base salaries: 250 sales people x $65,000 per year =$16,250,000
Car $550 per month x 12 months =$6,600 x 250 reps = $1,650,000
Employer contribution to Heath Insurance = ???
Employer contribution to 401k = ???
Expense account/phone, fax, marketing, etc. (pure guess here...$300 per month per rep?? $300 x 250 reps = $75,000 x 12 months =$900,000
Fuel expense $50 per week x52 weeks =$2,600 x 250 sales people = $650,000
Commissions paid out annually= ???
Payroll taxes on 250 sales people annually=???
Dos salary of 20? X $150,000 = $3,000,000
Dos car allowance of 20? X $550 per month = $11,000 x 12 months = $132,000
Employment contribution for dos payroll taxes, Heath insurance, 401k contribution =???
Total expenditure for US sales force AT A MINIMUM is $21,932,000. This does not include commissions, insurance, payroll taxes, or 401k contributions that the employer pays out of their own coffers. Hypothetically speaking, the number may well be closer to $40,000,000 (or greater).
So......EW....you guys want to save between $20-$40 million per year? Make us 1099.
No more Heath insurance. No more car allowance. No base salaries, 401k contributions, and no payroll taxes to deal with. As Bob Dylan once pontificated..."The times they are a changing." This is no longer the SN company that it once was. Healthcare has changed, the industry has evolved, and perhaps the greatest, or smartest move SN ever made was to sell this division and let someone else take the risk while comfortably riding in the back seat with their 49% stake.
So what's in it for us? (Your humble and loyal sales force.)
There is currently $2817.50 of gross profit per unit on the table. Remember that each unit has a percentage increase of 3,415% per unit sold at a measly cost of $82.50.
So what is fair? What is equitable for a salesperson giving up their base, their car allowance, 401k, et al.?
I propose a flat 30% commission is not only fair, but very reasonable based on the above information. (If you are a salesperson, grab a calculator and take 30% of what your gross sales were last year to see how much better off your life would be under my plan.) The breakdown works quite simply...33% of that 30 will have to go to our taxes. We have to pay for our own Social Security and Medicare taxes. (Don't worry guys, we can write off expenses like mileage at an average of $.50 per mile. Not to mention you can write off anything from a stapler to your home office... see a good CPA.)
10% of the 30% is set aside for inventory. I don't expect BV to give us this product for free. That leaves roughly 10% of pure profit for each salesperson after all expenses are met.
I've heard the tired argument that compliance is an issue, so therefore we can't do this model. Bull crap. The guidelines are set to keep the cheaters out of the system. If that were the case, then all mom and pop DME's would have gone out of business years ago.
So to sum it up, what I have proposed is a win-win for both BV and the salesforce. You want motivated salespeople? Take away the pharma model security blanket and let us roll up our sleeves and do what we do best. SELL. A 1099 employee is paid exactly what they're worth.
According to people I've heard talk about it, the Exogen unit costs around $45 - $120. Taking the average we come up with $45 + $120 = $165/2 = best case guess of $82.50 for an Exogen unit. Average reimbursement is $2,900 which is $2,817.50 of gross profit per unit. (Or another way of looking at it is a percentage increase of 3415.151%)
How much does it cost to sell one unit? (Net profit)
There are fixed variables involved outside of the sales department which include things like internal reimbursement and patient assist, along with customer service, shipping, etc. I think you get the point. What percentage of the gross profit represents the "cost of goods sold" outside of the sales force? Not sure, however, we can focus on the sales force to perhaps better understand how Bioventus and EW are literally throwing millions of dollars away annually by continuing the current sales model. Below is my "best guess" as to the expenditures that correlate to us, the sales department.
Average sales base salaries: 250 sales people x $65,000 per year =$16,250,000
Car $550 per month x 12 months =$6,600 x 250 reps = $1,650,000
Employer contribution to Heath Insurance = ???
Employer contribution to 401k = ???
Expense account/phone, fax, marketing, etc. (pure guess here...$300 per month per rep?? $300 x 250 reps = $75,000 x 12 months =$900,000
Fuel expense $50 per week x52 weeks =$2,600 x 250 sales people = $650,000
Commissions paid out annually= ???
Payroll taxes on 250 sales people annually=???
Dos salary of 20? X $150,000 = $3,000,000
Dos car allowance of 20? X $550 per month = $11,000 x 12 months = $132,000
Employment contribution for dos payroll taxes, Heath insurance, 401k contribution =???
Total expenditure for US sales force AT A MINIMUM is $21,932,000. This does not include commissions, insurance, payroll taxes, or 401k contributions that the employer pays out of their own coffers. Hypothetically speaking, the number may well be closer to $40,000,000 (or greater).
So......EW....you guys want to save between $20-$40 million per year? Make us 1099.
No more Heath insurance. No more car allowance. No base salaries, 401k contributions, and no payroll taxes to deal with. As Bob Dylan once pontificated..."The times they are a changing." This is no longer the SN company that it once was. Healthcare has changed, the industry has evolved, and perhaps the greatest, or smartest move SN ever made was to sell this division and let someone else take the risk while comfortably riding in the back seat with their 49% stake.
So what's in it for us? (Your humble and loyal sales force.)
There is currently $2817.50 of gross profit per unit on the table. Remember that each unit has a percentage increase of 3,415% per unit sold at a measly cost of $82.50.
So what is fair? What is equitable for a salesperson giving up their base, their car allowance, 401k, et al.?
I propose a flat 30% commission is not only fair, but very reasonable based on the above information. (If you are a salesperson, grab a calculator and take 30% of what your gross sales were last year to see how much better off your life would be under my plan.) The breakdown works quite simply...33% of that 30 will have to go to our taxes. We have to pay for our own Social Security and Medicare taxes. (Don't worry guys, we can write off expenses like mileage at an average of $.50 per mile. Not to mention you can write off anything from a stapler to your home office... see a good CPA.)
10% of the 30% is set aside for inventory. I don't expect BV to give us this product for free. That leaves roughly 10% of pure profit for each salesperson after all expenses are met.
I've heard the tired argument that compliance is an issue, so therefore we can't do this model. Bull crap. The guidelines are set to keep the cheaters out of the system. If that were the case, then all mom and pop DME's would have gone out of business years ago.
So to sum it up, what I have proposed is a win-win for both BV and the salesforce. You want motivated salespeople? Take away the pharma model security blanket and let us roll up our sleeves and do what we do best. SELL. A 1099 employee is paid exactly what they're worth.
1099 anyone?
Aucun commentaire:
Enregistrer un commentaire