A broker can be an individual or a firm which helps in the execution of a transaction between a buyer and a seller. A broker mainly works for a commission or certain fees for his efforts in the execution of the deal. A commission is a certain percentage of the total part of the transaction amount.
Role of Sales broker
The word “Broker” is derived from the French word “Broceur,” which means “small trader.” A sales broker works as a small trader to help buyer sell his products for a certain amount of commission.
The commission given to a sales broker is not fixed. It varies depending on the goods sold or the effectiveness of the sales broker in executing the sales and the total profit it helps the seller generate.
A broker act as an intermediator between a seller and a buyer. The role of a sales broker is to make the market research and bring together the seller and the buyer.
It can represent one party such as either the seller or the buyer at one time and not both the parties at one time. The role of sales broker becomes quite important when it comes to the sales of financial instruments and real estate properties.
A sales broker being in the market know the potential sellers and buyers in the market. For example, if you are immigrating to a new city as you have got a job there.
Your first requirement will be to find a suitable house for yourself which should be within your budget, should not be so far from your workplace, and it should be located in a well-respected locality.
Here the role of a real estate broker becomes important. You will search the real estate agent in the city and will contact them and tell them the requirement and budget for the house that you are looking for.
Then the broker will do the market research and find suitable options for you. Then you can meet house owners and negotiate with them for the rent of the house and other conditions.
The involvement of a real estate broker at the small commission will make the house hunting work easy for you.
Advantages of Sales brokers
Sales brokers play an important role in the sales of a company. A company usually pay a commission for every unit sold. Followings are the advantages of a sales broker for an organization.
#1 Sales brokers help to boost sales:
They are usually experts and have excellent selling skills. A sales broker gets a commission for every unit he sells for you because of this reason he will feel motivated to sell more units so that he can earn maximum profit.
#2 Sales broker plays an important role in the sales of expensive products such as machines and equipment:
People don’t go to stores to buy industrial machine and equipment. Sales brokers play an important for the sales of such products. Sales brokers help in generating lad for the sale of expensive products.
#3 Eliminate excessive work:
Sale of large products like industrial machinery and equipment is a complex process. They get the information about the requirement of the product and negotiate the price with them to finalize the deal.
They also perform all the excessive work and documentation work to finalize the deal. Which reduces the tremendous work for the organization.
#4 Gets you right price:
As sales broker takes percentage commission on the price that he will get you for the sales of the product. Therefore, he makes sure that he will get you the highest price for the sale of the product. Which is beneficial for the organization as they can generate maximum profit.
#5 Authentic deals:
A sales broker is professional, and his earning depends on the sales that he makes. Therefore, he will bring you an approved buyer so that there will be less discrepancy in the deals.
#6 less selling and distribution costs:
Distribution costs make 30% of the total price of the product. If you sell your products through sales broker, then you can reduce this cost and can sell products at economical prices which will increase the preferability of your product in the market.
#7 Right marketing of your products:
Sales brokers earn on the name of your company. Therefore, they make sure the goodwill of your brand name in the market. You don’t require to hire an additional marketing team to create goodwill of your company in the market.
Disadvantages of Sales Broker
#1 Partial Interest:
Sales brokers represent the seller only and try to make sure that the products should be get sold at maximum prices. Therefore, many buyers usually don’t like to buy through the sales broker as they believe that they can buy products at cheap prices by directly contacting the seller.
#2 Commission or sales charges:
Sales brokers work on commission for per unit sold or charge for the assistance that they provide to make a sale. Sometimes, some broker works on such a high commission that the profit margin of the company gets affected tremendously.
#3 Loss of profit:
A sales broker works on commission on the sale of each product. Sometimes, when a buyer is too adamant about buying a product at a certain price, the sales broker gives in to sell the product at much lower prices to receive the part of the deal rather than getting nothing.
He will get his part and move on to the next deal, but the loss of selling a product at low prices will come on the shoulders of the company.
#4 Push Strategy:
Sales broker usually opt the method of forcing buyers to buy products at any cost. You might sell a product for once, but you can lose that customer for forever because of the harsh treatment given by your representative or sales broker.