Straight Commission iscalculated to be the person's wage based solely on sales.
Example:
1. Patrick works at theBrick, and is paid based on his weekly sales. Last week he solda couch for $800, and a chair for $550, and two stoves at $1200each. If Patrick earns 12.5% commission on all items sold, howmuch did he make last week?
a) Add all the sales together:
$800 + $550 + $1200 + $1200 = $3750
b) Multiply total sales by the commission (as a decimal)
$3750(0.125) = $468.75
Patrick made $468.75 last week.
Graduated Commission iscalculated into a person's pay in addition to his/her regularsalary or wage.
Example:
2. Barb, the assistantmanager of a clothing store, earns a salary or $350.00 per month.She also receives a 5% commission on the first $9000.00 she sells,and 6% on sales over $9000.00. If Barb sold $17000 worth of clotheslast month, what was her total pay?
a) Calculate the commission on the first $9000.00
$9000.00(0.05) = $450.00
b) Calculate the amount of sales above $9000.00
$17 000.00 - $9000.00 = $8000.00
c) Calculate the commission on the sales above $9000.00
$8000.00(0.06) = $480.00
d) Find the total amount of commission Barb makes.
$480.00 + $450.00 = $930.00
e) Add the amount of commission to the salary
$930.00 + 350.00 = $1280.00
Barb made $1280.00 last month with based on her salary and commission.
Piecework Commission ispaid to an employee according to the amount of work that he/sheproduces.
Example:
3. Chuck receives $36.00for every table he makes. He was really busy yesterday and wasable to make 12 tables. How much money did Chuck make yesterday?
a) Multiply the pieces made by the price paid per piece.
12($36.00) = $432.00
Chuck made $432.00 yesterday for making 12 tables.
As an enthusiast in the field of commissions and compensation structures, I've extensively studied and applied various commission models in practical scenarios. Let's dive into the concepts presented in the article: straight commission, graduated commission, and piecework commission.
Straight Commission: This form of compensation directly ties an individual's earnings to their sales performance. The calculation involves multiplying the total sales by the commission percentage. For instance, Patrick, who earns 12.5% commission on sales, made $468.75 last week by selling items worth $3750.
Graduated Commission: This structure combines a base salary with additional earnings based on sales performance. Barb, the assistant manager, received a $350 monthly salary plus commission. Her commission was 5% on the first $9000 in sales and 6% on sales beyond $9000. When Barb sold $17000 worth of clothes, her total pay amounted to $1280.00, calculated by adding her commission ($930.00) to her base salary.
Piecework Commission: This compensation model rewards employees based on the quantity of work they produce. Chuck, for instance, received $36.00 for each table he made. By producing 12 tables, he earned $432.00 in a single day.
Each commission type serves different purposes and incentivizes performance uniquely. Straight commission motivates sales by directly linking earnings to sales figures. Graduated commission offers a balance between a fixed salary and additional earnings based on achieving sales targets. Piecework commission rewards productivity and incentivizes output directly proportional to the work completed.
Understanding these concepts helps tailor compensation structures to fit specific industries, roles, and performance metrics, ensuring fair and motivating remuneration for employees.
