A commission is referred to as the fee paid by a business to a salesperson for his services rendered either to help facilitate or complete the sale. Commission rate is determined by the sales agreement. Typically the following factors are helpful in calculating commission.
Commission rate: Obvious by its name, commission rate represents the percentage of the fixed amount of cash to be received duly for sales made.
Commission basis: usually a commission amount is based upon the sales made but it may be based on another factor like net profit. Profit based commission is opted by business when they want to evoke their salesperson for selling the most profitable products. A special commission may also be devised by the management when they want to sell a product which is becoming outdated.
Overrides: Overrides refer to targeted sales reached for example the company at first decided to give 5% of sales as the commission but when the target was reached it reactively changed it to 8% of sales.
Splits: It involves the efforts of more than one person for making the sale possible.
Delay in payment: normally commission is paid on sales made in the preceding month which can prove difficult at times thus delay in payment.
You can use a commission calculator for determining the amount of commission to be given. It will generally require the commission rate and the amount of sale, thus calculating the commission automatically with valued entered in the respective fields.
It is generally a quick way of calculating commissions. It is time-saving and easy to use. It is certainly possible that companies offer different commission rates for different products. In this case, the commission rate of a specific product is multiplied by the amount of sale and commission calculated for each product sale.
This approach for the calculating commission is generally acceptable one. Irrespective of any human error the commission calculator serves as an important medium for calculating commissions paid to a salesperson for their time and effort toward making the sale possible. Thought to be the rule of encouraging the salesperson as well.
Sales Commission Calculator Template