1 3 Commission there are 3 types Commission

1 -3 Commission – there are 3 types Commission – is a fee or percentage of interest paid for sales made. A commission may be an amount for each item sold, or it may be a percent of the dollar value of sales. This is usually paid to salespeople as an incentive to sell more.

1. Straight Commission Straight commission – when sales people are ONLY paid commission…. they don’t get paid a salary or wage per hour worked. They can also be paid per item sold. To Calculate = %Rate of commission x quantity sold = $commission pay

Straight Commission Examples… EX. Earl Brown sells greeting cards and is paid a straight commission of $0. 75 on each box of cards he sells. During March, he sold 145 boxes. Find his commission. $0. 75 x 145 = $108. 75

Straight Commission Examples…(con’t) EX. Terri Smith is paid a straight commission of 5% on her sales. During September, her sales were $32, 000. What was her commission? 5% (OR. 05) x $32, 000 = $1, 600. 00 Get your white boards, a marker and do #A – C on page 15. . then show answers to Mrs. P.

2. Commission based on a quota Commission based on quota – The amount of sales a salesperson must sell before they make any money for commission. (Salespersons may also be paid a salary in addition to commission. ) Ex: Clark is a salesperson that works on straight commission, however, before he makes any money, he must reach a quota of $3, 000. 00 in sales. Last month he sold $5, 900. 00 worth of goods and gets paid a commission rate of 5%. What was his gross income? $5, 900. 00 - $3, 000. 00 = $2, 900. 00 x. 05 = $ 145

Commission (con’t) Brain Teaser… Clark is a salesperson that works on straight commission, however, before he makes any money, he must reach a quota of $3, 000. 00 in sales. Last month he sold $2, 900. 00 worth of goods and gets paid a commission rate of 5%. What was his gross income?

Salary plus commission…. Ex: Sue is a salesperson that works on salary plus 8% commission, however, she has a quota to reach of $4, 000. 00 before she makes any commission money. Last month she sold $10, 000. 00 in sales and she earns a salary of $500 a month. What was her gross pay? $10, 000. 00 - $4, 000. 00 = $6, 000. 00 x. 08 = $480 (commission) $480 + $500 (salary) = $980. 00 Using your white boards, # E & F on page 16 show answers to Mrs. P. . 00

3. Graduated Commission - when salespersons rate of commission increases as their sales increase. Ex: The rate may be 3% on the first $12, 000 of sales, 4% on the next $6, 000 and sales over $18, 000…graduated commission can also be on the number of units sold. Look at Example # 4 on page 16. .

Graduated Commission (con’t) Bob works on a graduated commission listed below; he sold $7, 450. 00 worth of goods this month, what was his gross income? l 3% on first $3, 000 l 5% on second $2, 000 l 7% on anything over $5, 000

1. Straight Commission Exercises… Tom sells Elite Coupon books for $20, for every book he sells he makes $5 profit. How much money does he make if he sells 30 books? 30 * 5 = $150 Tom sells Elite Coupon books for $20, he makes 15% profit on all the books he sells. How much money does he make if he sells 30 books? 30 * 20 = $600 *. 15 = $90

2. Commission Based on Quota Exercises… Tom is a car sales person. Every month he makes $200 on every car he sells after he sells one car. This month he sold 15 cars, how much money did he make in commission? 15 – 14, 14 * 200 = $2, 800 Tom is a car sales person. Every month he makes 5 % of his total sales above $10, 000. This month he sold $65, 000 worth of cars. How much did he make in commission? ? 65, 000 – 10, 000 = 55, 000, 55, 000 *. 05 = $2, 750

Commission Based on Salary and Quota Exercises… Tom is a car sales person. Every month he makes a salary of $200 and $200 on every car he sells after he sells one car. This month he sold 15 cars, how much money did he make in commission? 15 – 14, 14 * $200 = $2, 800 + $200 = $3, 000 Tom is a car sales person. Every month he makes a salary of $200 and 5% of his total sales above $10, 000. This month he sold $65, 000 worth of cars. How much did he make in commission? ? $65, 000 – $10, 000 = $55, 000, $55, 000 *. 05 = $2, 750 + $200 = $2, 950. 00

Graduated commission exercises… Tom is a car sales person. Every month he makes $200 on the first 10 cars he sells and $300 on every car sold above 10. This month he sold 15 cars, how much money did he make in commission? 10 * $200 = $2, 000, (15 – 10). . 5 * $300 = $1, 500 $2, 000 + $1, 500 = $3, 500 Tom is a car sales person. Every month he makes 10% on the first $40, 000 cars he sells and 15% on any sales above that. This month he sold $75, 000 worth. How much money did he make in commission? $40, 000 *. 10 = $4, 000, (75, 000 – 40, 000). . $35, 000 *. 15 = 5, 250. $4, 000 + $5, 250 = $9, 250