Commission - Term Overview

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A commission is a percentage of the value of a certain transaction or activity that is charged to the customer or paid to the seller as a result of the functions that it has performed. This commission is materialized in money that is charged as an incentive for certain efforts or as a charge for a certain operation.

Commissions, therefore, as we have indicated, can be part of the salary structure of certain workers, usually salespeople who have to meet certain conditions to obtain said amount.

That is, sellers have their salary divided in two: a fixed part + a variable part (depending on what they are able to sell). If this salary structure is met, we must clarify that this is done to encourage competitiveness at work or to achieve certain monthly objectives imposed by the company or higher.

Regarding the type of commission to remunerate sellers, we can highlight the following most common:

  • In a linear way: Commission is paid according to the amount to which it has been established.
  • By margin: Commissions are applied according to the margin the seller makes. That is, the effective sale price / minimum sale price ratio is applied. Depending on the amount for which you can sell the good or service, you will get more or less percentage, always starting from a minimum.
  • Scale: Commissions are set according to a trait of values ​​and sellers will be able to obtain a different percentage of commissions depending on the sales that they manage to produce. That is, the more you sell, the more commissions you will get (although, in some cases, this scale usually works the other way around).

On the other hand, there may also be the possibility that the commission is the means of collection for a certain transaction. In this case, the commissions are usually determined according to the degree of competition in the market, as well as the information that the client has.

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