About Peter Mueller

CEO of The Profit Centre

Nine Principles of Designing Profitable Compensation Programs

iBroker and The Profit Centre - Compensation Programs

Before designing a compensation program it is important to first identify who your customer truly is before you start recruiting. I believe that many Brokers do not have a defined outline of the REALTOR® they want to attract. Given the challenges of recruitment, Brokers tend to be seduced by the physiological win of a new heartbeat as opposed to being focused on acquiring the right REALTOR®. The result is often the development of compensation programs designed to attract them on price.

The Nine Principles

The following principles should be considered when creating compensation programs:

  1. You do not have commission splits, you have compensation programs
  2. Realize that some people prefer a Chevrolet instead of a Cadillac
  3. Define who your ideal REALTOR® is, don’t let them define it for you
  4. Do not create plans based on the lowest common denominator
  5. Your compensation programs should be based on the risk vs. reward principle
  6. Do not offer conflicting compensation programs that promote one plan at the expense of another
  7. Do not underestimate the physiology of compensation programs
  8. Realize that team members need to achieve the same Gross Profit Per REALTOR® Minimum Objective as everyone else
  9. Have a reasonable number of plan options

Creating compensation programs is easy when you have clarity on the most important number of a brokerage business, your Minimum Gross Profit Per REALTOR® Objective. Working with 100’s of offices and doing more than 600 Profit Analysis at The Profit Centre, we determined that a reasonable benchmark for Gross Profit Per REALTOR® should be around $13,500 per REALTOR®. Note: This is a benchmark for Gross Profit and does not include monies collected on behalf of 3rd parties such as associated regional fees per REALTOR®. Breaking this down we have determined that there are three parts that make up the benchmark:

Fixed Costs:

$3,500 per REALTOR®

Variable Costs:

$5,000 per REALTOR®


$5,000 per REALTOR®

For deeper insight into the Gross Profit per REALTOR® Objective refer to my blog posts titled, GPPR – The Most Important Metric of Your Brokerage and Why it Can be Elusive”, and “A Profitable Brokerage Starts with the Clarity of Your Vision and Goals“.

When there is clarity on the Minimum Gross Profit Per REALTOR® Objective it is simple to design compensation programs. It is important to first review your existing plans and answer the following questions:

  • Will they achieve the objective necessary per REALTOR®?
  • Given many plans have variable fees, i.e. percentage of gross, do you know how much Gross Commission Income (G.C.I) is necessary to achieve the objective on each plan?
  • Do you have minimum production standards set for each plan?

Because many plans are commission percentage based, it is important to know how much G.C.I.  a REALTOR® needs to achieve within 12 months in order to meet the objective. It makes no sense to offer plans that do not achieve the objective. Let’s take a closer look at Principle #1.


At The Profit Centre we created a powerful tool called The Compensation Plan Calculator. It lays out different options and scenarios side by side in order to vet out what works best to achieve your objective. Request free access and a complimentary walk through at info@theprofitcentre.com.

Principle #1 – Compensation Programs, Not Commission Splits

You do not have commission splits, you have compensation programs. Commission splits denote price and compensation programs denote value!

It is important to decide who you are and what value you bring. It is fair to say that all brokerages are not alike even within their own brand. Just like a real estate agent on a listing appointment needs a strong presentation, a broker also needs a substantive recruiting presentation. The purpose of the presentation is to quantify your points of distinction. Ultimately, with the absence of value (or perceived value) price is the only issue.

Compensation programs include all the value that the brokerage brings to the table in order to help an agent become more successful. Your value proposition needs to be clearly identified so that it is clear you are worth more than your competitors because you provide the services necessary to increase their bottom line.

One of my favourite questions to an agent is, “What’s more important to you, how much money you save or how much money you put in your pocket?” If an agent does not see the value you are offering it may be that either a) you could better articulate your value, or b) that agent is not the right fit for your organization.

If you compromise the integrity of who you are and what you bring to the table, you may compromiseintegrity - iBroker and The Profit Centre your financial model and start to water down programs. Offering special deals can hurt more than we think. Integrity lies in the ability to treat everyone fairly. Confidence and integrity come from sticking to your guns. Be proud of who you are, what you are offering and be willing to say no. The tail starts wagging the dog when we are not clear and firm on our position.

Consider the fact that providing services such as training is a costly undertaking. If an agent does not see value in it for themselves then it will be difficult for you to justify your price points. That being said, are you catering to everyone or is your focus on those that invest in themselves to be more successful. Agents that are price focused tend to be the ones that cost you the most in time and energy.

A coach of mine said to me years ago, “show me your lowest producing agent and I will show you your minimum production standard for the company”. Ouch! It’s one thing to say we have a standard, but it’s another thing whether we uphold it. Nothing discourages more than compromising our values.

We will discuss the next eight principles in subsequent blog posts. This is Peter Mueller signing off wishing you all a profitable day!

We’re Better Together

Peter Mueller

iBroker, the simplified back office management application powered by GryphTech, has partnered with Peter Mueller of The Profit Centre, a leading business evaluation company. This partnership offers Brokers the real-time insights needed to run an efficient and profitable business by bringing together financial, operational and analytical tools.

Visit goibroker.com/profitcentre to learn more.

Partners, iBroker and The Profit Centre

When Recruiting, Stop Selling Price

Often when I ask a Broker to role play and try to recruit me as an agent, I find the following fundamental challenges in their approach:

  • They do not have an agenda.
  • They do not ask any (or enough) questions.
  • They try to tell me too much, which is overwhelming.
  • They focus on price primarily.
  • If they discuss value, it is not focused on what I want or how it benefits me.

Let’s tackle the first observation.

Put Prospects at Ease with an Agenda

It is important when meeting someone for an appointment that you create an environment that puts your prospect at ease. An agenda does this. Here is what I recommend the agenda look like:

  1. About You
  2. About Us
  3. Your Value Proposition
  4. Unanswered Questions
  5. Mutual Decision

In articulating the agenda I would suggest it sounds like the following:

Continue reading

Profiles of Profitability Success: Salt Fowler Team

Welcome to our new series Profiles of Profitability Success.  In it we want to share knowledge and insights on how to build a profitable business by interviewing the best and the most successful people in the industry.

This month, we will be profiling the Salt Fowler Team.

After going through our Team Profit Analysis process, we discovered that Gord Fowler and Lisa Salt are number one in just about every single category we have, and notably in category; Team Leader Net Profitability.

To gain more insights watch the interview below.

For more information on The Profit Centre’s Team Profit Analysis contact us for a complimentary 1-on-1 walkthrough.

A Profitable Brokerage Starts with Clarity of Your Vision and Goals

The clarity and commitment to your vision and goals will ultimately pave a path to your destiny and your success. The problem is that typically they are not clearly defined.

Vision - goibroker.com

I have discovered that the typical broker was a successful REALTOR who would never consider compromising their commissions to a potential customer. They would have a strong listing presentation that would identify their points of distinction. They take time and effort in a strategic manner in order to validate their services to command the fee they feel they are worth. One of the methods is to prove that by listing their home with them, the customer would net more money in less time than their competitors. The disturbing part is that many of them did not take that skill and apply it to their brokerage business.

When I interview brokers internationally and ask them what their goal and their vision is, I rarely get a good response. Even worse the goal seems to always be defined by how many offices and REALTORS they want to have. That is one of the worst ways to define your goals. In business and in life there is a principle that says “What you measure gets improved”. If your goals are only defined by volume numbers you are setting yourself up for failure. The most important number to define is Profit.

When asked the question “What is your profit goal?”, many do not have an answer. The problem is the ability to forecast the possibilities.

One of the first questions I ask a broker in a consultation is “What is the potential of the office?”. Potential is defined by the size and demographic of the marketplace, how many realtors work in that demographic, the quality of the REALTORS and the expectation of how many we anticipate hiring over time. This is the first step in defining what the end or 100% potential looks like. Then, we determine a conservative answer that we can reverse engineer by looking at the end state, or in other words, by looking at the opportunity as if we are already there or at 100%.

Let’s use an example.

Lets say that the conservative answer to the above question is 30 REALTORS maximum. This is the starting point. This becomes the guide in order to define how much space we want and need and to start budgeting revenues and costs accordingly.

Let me first explain the 3 factors in production.

Factor 1 – Fixed expenses. Includes: rent & occupancy/ dues & subscriptions/ licenses & insurance & IT expenses.

Factor 2 – Variable expenses – Includes: owner-manager salary/ employee salaries, office supplies and expenses.

Factor 3 – Profit

Based on our extensive research and data we can offer some benchmarks in these areas.

It is important to understand what a benchmark is. It is not an average nor a best practice. A benchmark is a reasonable metric that can be used as a guide. Every area or marketplace of course, has it’s differences. In lieu of knowing your regional metrics, benchmarks can be used as a base to compare to. The following is a good base.

Factor 1 – Fixed – $3,500 per REALTOR per year

Factor 2 – Variable – $5,000 per REALTOR per year

Factor 3 – Profit – $5,000 per REALTOR per year

Total – $13,500  Gross Profit per REALTOR per year Objective

Using the benchmarks mentioned, if the costs per REALTOR is $8,500 per year and you want to make $5,000 profit per REALTOR per year you would need to earn $13,500 in Gross profit per REALTOR annually on average.

Now that we have this level of clarity it is simple to create your vision statement.

Using this example, your vision statement would be:

To build an office with 30 REALTORS averaging $13,500 in Gross Profit Per Realtor, paying myself a benchmarked management salary of $60,000 a year and having a net profit after expenses of $150,000 a year to create approximately $500,000 of equity.

Now that’s clarity of vision! That’s a clear goal based on volume and return on volume.

How many did not even consider the fact that they are creating equity when building their business? Clarity gives you the inspiration in order to do the hard work. Reading your vision statement daily helps you focus on what’s most important.

At The Profit Centre our Mission Statement is:

“Changing lives by guiding our clients to profitability”. When you are profitable you have the freedom to be more generous with your time and your heart!

How to Triple Profits Without Raising Fees

This month, Peter Mueller, CEO of The Profit Centre, and Carlos Matias, CEO of GryphTech and Creator of iBroker, held a popular Broker webinar to share what every broker needs to know about running a profitable business. Leveraging decades of industry experience, they discussed how to analyze financial and operational metrics to effectively inform business strategy and how to implement a killer strategy proven to increase profitability.


Benchmarking Profitability - Profit Centre and iBroker Webinar - goibroker.com
Watch and learn:

  • How you should define business profitability
  • The most important metric of your business
  • How your brokerage compares relative to your peers
  • The Killer Strategy – How we tripled profits without raising fees
  • How the right software choice can boost profitability


“Gross Profit Per Realtor (GPPR) is THE most important metric of your business.”

Are you tracking this?
If not, watch the webinar to learn why you should.

For more information on The Profit Centre, call 1.877.509.2330

The Dangers of Erroneous Reports: Understand How Your Data Was Derived & Interpret It Correctly

How Clean is the Data Upon Which You are Basing Decisions?

In order to run a profitable Real Estate Brokerage, one needs to know and truly understand the metrics involved in running one’s business.

At the Profit Centre, we strongly believe that THE most important metric in the brokerage business is Gross Profit Per Realtor® (GPPR). It is instrumental in defining your Gross Profit per Realtor® Objective (GPPRO), a fundamental business metric.

Through my experience working with over a thousand brokerages in varying capacities over the last ten years, the ability to access key information and more importantly clean information is critical in making sound financial and operational decisions.

As part of our service offering, we often recommend complementary services that are necessary in order to operate at a high level. One of these is iBroker by GryphTech, a powerful back office management solution. We highly recommend iBroker to provide the clean foundation necessary to create profitability.

Over the years I have come across several glaring errors and erroneous methods in other back office management software that have derailed a broker’s ability to manage and operate his/her business effectively. The risks are high, and it is important to have a solid foundation to work from to be successful and profitable. Continue reading

8 Key Metrics Every Brokerage Should be Tracking for Revenue Growth

When it comes to business planning and measuring performance, real estate brokers often focus most of their effort on developing the sales side of their businesses. Revenue growth, albeit a very important metric, is only one indicator of overall business performance. There are other key metrics that should be tracked ongoing to effectively inform business strategy and be set up for long-term success. For some, this can be an overwhelming process as they are unsure what to track and how.

Profit Centre 8 key metrics for Revenue Growth(Download Infographic)

At The Profit Centre, we help our customers understand the value and importance of tracking 8 key metrics. These are the 8 key metrics every broker should be tracking to make effective business decisions. Click the preview image below to download the Infographic. For more information on how to effectively track these financial and operational metrics, please call Peter Mueller at 1-877-509-2330.

GPPR – The Most Important Metric of Your Brokerage and Why It Can Be Elusive

Gross Profit per RealtorIn order to run a profitable Real Estate Brokerage, one needs to know and understand the metrics involved in running one’s business. One of these metrics, which we consider to be the most important metric, is the GROSS PROFIT PER REALTOR (GPPR) metric. This metric is critical to obtaining your Gross Profit per Realtor Objective (GPPRO).


Gross profit can be defined as the profit a company makes after deducting the costs associated with providing services. In the broker’s case, it is the service from providing the framework from which realtors can facilitate their sales. Once this cost is deducted from the Gross Commissions, then the brokerage’s financial health is revealed by the proportion of money left over from revenues after paying out sales associates.

Gross Profit is the revenue a brokerage has available to pay for the day to day operations. On a typical income statement the Gross Commission Income generated is identified on the top line and the Cost of Sales is deducted (the money paid back to the realtors) to determine the Gross Profit. For many this number zeros out and the brokerage makes money from the desk fees, transaction fees and percentage fees.

The GPPR is achieved by clearly identifying the gross profit for the company divided by the average number of realtors in a 12 month period.

The challenge that exists is what we at The Profit Centre call the pollution in the numbers. This occurs when blending Flow Through Income and Gross Income together in one general ledger (GL) item.

Flow Through Income

Flow through income is the revenue that is collected on behalf of a 3rd party such as regional fees.

This can be better understood through an example:

Broker A wants to earn $12,000 in Gross Profit per year and blend in $3,000 in Flow Through Income a year. Typically the realtor is offered a 70%/30% split until the broker nets $15,000 or the realtor achieves $45,000 in Gross Commission Income.

When that realtor closes a sale the revenue gets posted into your back office software as percentage fee income.

The problem exists because the two revenue types are not separated out. A second problem exists for that realtor that does less than $45,000 in Gross Commission Income within the contract year therefore complicating matters even more.

If Gross Profit Per Realtor is the most important metric of a brokerage and that critical number is polluted than how is it possible to set clear targets and measure your results properly.

Taking the time to analyze and identify your revenue with clarity is the starting point for taking control of your business.
We know how to separate these 2 types of revenue in order to give you a clear and accurate picture of your financials.

At The Profit Centre, we can help clarify these issues in order for you to take control of your business.