Commission
In short: Commission is pay that a worker earns as a percent of the money from the goods or services they sell, so more sales mean a bigger paycheck.
7th GradeRatios and Percents7.RP.A.3
What is Commission?
A salesperson who earns a commission gets a cut of every sale instead of, or on top of, a fixed wage. The cut is a percent of the sales total, so the paycheck rises and falls with performance.
With total sales \(S\) and a rate \(r\) as a decimal, the pay from the percent is \(S \times r\). Some jobs add a base salary \(B\), giving total earnings \(B + S \times r\). Real estate agents, car dealers and furniture sellers are paid this way.
How to spot it
- A job description says the worker earns a percent of what they sell, such as 6.5% of furniture sales.
- A problem lists weekly sales totals and asks for the paycheck that results from them.
- Earnings are split into a fixed base amount plus a variable part that depends on sales.
- You are given the pay and the sales and asked for the percent rate the employer used.
The method
- Find the sales total the percent applies to, adding up several sales if needed.
- Convert the percent to a decimal and multiply it by the sales total.
- Add any base salary or bonus to that product to get the full earnings.
- To find the rate, divide the earned amount by the sales total and write the quotient as a percent.
Commission: solved example
Problem
Nadia sells furniture and earns 6.5% on every sale. In March her sales total \(\$18{,}400\). How much commission does she earn?
Solution
Rate as a decimal: \(6.5\% = 0.065\).
Multiply: \(18{,}400 \times 0.065 = 1{,}196\). Nadia earns \(\$1{,}196\) for the month.
Try it
Question 1
A car salesperson has a base pay of \(\$600\) and earns 2% on \(\$31{,}000\) of sales. What are the total earnings?
Show the answer
\(31{,}000 \times 0.02 = 620\), then \(600 + 620 = 1{,}220\). Total: \(\$1{,}220\).
Question 2
An agent earned \(\$210\) on \(\$3{,}500\) of sales. What was the rate?
Show the answer
\(\frac{210}{3{,}500} = 0.06\), so the rate was 6%.
Commission vs. Markup
Commission pays a worker a share of a sales total, and the money goes to a person. A markup raises an item’s price above its cost, and the extra money stays with the business. A shop owner might use a markup to set the price and then pay a commission out of the revenue.
Keep going
Lessons
Worksheets and quizzes
- Percent Problems: Tax, Tips, Discounts and Markups – Worksheet
- Percent Problems: Tax, Tips, Discounts and Markups – Quiz
Related words
Whole dictionary: A–Z · 7th Grade · Ratios and Percents