Hi, my name is James Shepherd.
In this video, I'm going to answer the most common question that I have been asked over
the last 10 years of doing what I do and that is, "How much can I make selling merchant
services?"
How much can you make selling merchant services?
Well, I've answered that question in two previous videos and in both cases to be really
honest, I've never been very happy with my answer to that question because I've
always tried to answer it the best way I could by talking about well, if you are full time
you could make this, but it really hasn't been specific.
What I decided to do and kind of this idea that I had for this mini-series; I hope you've
enjoyed it.
I've really enjoyed shooting it and recording it.
What my idea was I wanted to answer that question of how much can you make selling merchant
services?
But I wanted to answer it by actually going through the assumptions that underlie that
question so that you could actually get an accurate answer to your question.
I also wanted to build a income calculator so that as I'm going to it, you had a little
bit more contacts.
So what I'm going to do before we dive into this last episode and it is not going to take
very long.
I do want to walk you through one more time the income calculator where we are at because
I know we are doing this every day and so it's been a day since you've looked at
this.
Here is what you need to do to get caught up to where we are at.
First of all, go to a URL.
Are you ready?
It's a link.
It's instantquotetool.com.
Click on goals.
You don't need to sign in.
You don't need to sign up or anything.
Click on goals.
Then we have our income calculator.
At the top, we have sales per month year one.
We have that at 12.
I'm not going to go into why.
Watch the previous videos.
Listen to the previous podcast episodes.
Next we have sales per month year two is at 7.
Sales per month year three and on is at 5.
Average up-front bonus is at $450.
Gross margin is at 70.
The residual split is at 50.
The annual attrition is at 20.
So that is where we are at right now.
If you have all of those in there, then here are the numbers you should come up with.
It should show that your monthly income for month one is $5,400, month two $5,400.
Why are those two months the same?
Because you are making sales, but you haven't gotten any residual.
You need to understand that residual is a full two month delay because it is going to
take your merchants about a month to start really processing their first full month.
Then it is going to take another month before you get paid on that month of processing.
So residuals are always about two months delayed.
So in that third month is when you get your first residual and if you look at it, you
can see it's $5,820.
You made $5,400 the previous month from up-front bonuses.
Now you are at $5,820 and so you are going to make an extra about $400 a little less,
what is that?
$370 or something in residual.
Next month $6,240, $6,660, $7,080, so you can see your residuals are growing each month.
By month six, you are already making $7,000 a month.
Your first year, you make $86,400.
Now I want to show you something real quick.
Go back up to your average up-front bonus that says $450 and change it to $200.
I want you to notice that your year one income just dropped from $86,000 to $50,000.
Why am I pointing this out?
Because one thing that frustrates me is a lot of people that talk about how leasing
is evil and it's terrible and nobody should ever do it and all that.
The truth is if you want to really survive your first year in merchant services, you
really should take a hard look at leasing and see if you feel comfortable with at least
doing leases on cash discounting, or maybe selling the Poynt Terminal, something you
can lease to increase your up-front bonus money.
If all you are doing is selling free terminals and you are like, "No, no, I get a profit
true-up."
Yea, profit true-ups go negative much more than they go positive usually.
You are probably going to be around $200, maybe $300 up-front, but either way, that's
going to dramatically damage your income your first year especially.
Now after the first year, it's not as important, but that's the important thing.
Let's go back up and change that back to $450 now.
You can see that as you are typing, it will just change the numbers down there.
Then we look down here at year two.
We can see year two is at $96,802.
I just want to show you something real quick.
So we are at $96,000.
Take your annual attrition from 20 down to 12 and you can see that you just added $5,000
a year to your income.
Taking that extra time to send that birthday card to your customer, to send that Christmas
greeting, whatever it is, totally worth it.
Okay.
Let's change one more number -gross margin.
Let's say you are only going after small mom and pop shops.
You look at year 5.
Year 5 right now based on the changes we've made, we are at $137,000 a year in year 5.
Let's change our $70 gross margin to $40, which means you are mainly going after smaller
businesses, small mom and pop shops.
We are now at year 5 at $90,000.
We just lost almost $50,000 because we are not targeting everybody.
We are not comfortable selling the two location pizza shop or the larger place.
We are only comfortable selling the real small mom and pop shops.
We just lost $50,000 a year.
Now notice in year one, you didn't lose very much at all.
Right?
The problem is the further on you go, your selection which business types you go after
is going to have a major impact.
How much can you make selling merchant services?
Well, if you are an average rep, doing the average thing, like I showed you with all
the industry averages, and you are doing half leases and half up-front, you can make $86,000
your first year and then it can grow from there to a heavy six figure income peeking
out around $140,000, $150,000 by your fifth year in the business.
If you are doing more or less than that, how do I answer your question?
I don't have to.
I built a calculator to answer your question.
Just go change the assumptions and see how much money you would make.
Hopefully, you are going to enjoy this calculator.
It's my gift to you.
It is 100% free.
You don't have to sign up or sign in.
While you are at instantquotetool.com though, please do take a little time to look at our
training and to look at our tool.
We have been adding probably one or two training courses every month exclusively to the instant
quote tool and right now we are adding a bunch more and we are building a lot more that we
are going to be adding to that.
So make sure you check that out.
My name is James Shepherd.
I hope you've enjoyed this mini-series as much as I've enjoyed recording it.
Have an awesome day!



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