TYPES OF

COMMISSION
COMMISSION
When a salesperson close a
business deal that involves
selling a product or a service-for
example, real estate, appliances,
internet service and insurance
policies- to their customers, the
agents are often paid a certain
amount based on a percentage of
their sales. Such amount is called
commission.
COMMISSION
Since a commission is a
percentage of the sales, then
the commission is equal to the
product of the commission rate
and the sale amount. The
formula in calculating
commission is:
C=rxS
COMMISSION
There are three commonly
known types of commission;
namely,
1. Straight commission
2. Salary-plus-commission
3. Graduated commission
COMMISSION
when employees are paid
only on commission- that is,
their commission is already
their entire pay- they are
said to be working on
straight commission.
STRAIGHT COMMISSION
For example, when a real
estate owner hires sales
agents to sell a property, there
are cases when the agents
only get paid based on
percentage of the property’s
market value after they close a
deal with a client. The amount
that they received is a straight
commission.
DETERMINING THE STRAIGHT COMMISSION

Ester is a real estate sales

agent who receives a straight
commission of 5% for every
property that he sells. If she
successfully sells a house for
P5,000,000, how much will she
get paid?
DETERMINING THE STRAIGHT COMMISSION

For every appliances he sells,

Peter receives 6%, straight
commission. One day, he sold
a television set for P12,000, a
refrigerator for P17,000, and a
washing machine for P8,000.
How much is his straight
commission?
 SALARY-PLUS-COMMISSION
Many salesperson do not prefer to
work on straight commission
because there are times when
closing a deal with their clients
does not come easy. To address
such concern, many employers
offer their salespersons a fixed
monthly salary in addition to their
commission. This type of
commission is called salary-plus-
commission.
 SALARY-PLUS-COMMISSION
Although salespersons can expect
to receive a fixed amount of salary
in a salary-plus-commission
arrangement, there are cases
when commission is only given
after they reach a certain sales
amount. The salary-plus-
commission, which is denote as
SC, is the sum of the monthly pay
P and the commission C; that is,
SC = P + C
 SALARY-PLUS-COMMISSION

Since C = r x S, we can also

write the formula for salary-
plus-commission as follows:

SC = P + r x S
DETERMINING SALARY-PLUS-COMMISSION

Peter works as a salesperson.

His employer pays him a salary
of P4,000 per week, plus a 3%
commission whenever his sales
exceed P3,000. If he sold
items worth P5,000 in a certain
week, how much did he receive
that week?
 SOLVE AND EXPLAIN
Paul is a real estate agent. He
was able to sell a lot for
P850,000. If he gets a 3%
straight commission from such
sale, how much is his
commission?
 SOLVE AND EXPLAIN
Zai earns a monthly salary of
P20,000 as sales agent in a
real estate firm. If she gets an
additional 5% commission and
she is able to sell a property
worth P2,000,000 in one
month, how much is her pay
that month?
GRADUATED COMMISSION
The third type of commission is
called graduated commission,
which means that the percent
sales earned (that is, the
commission rate) increases
incrementally as the sales amount
increases. A company usually
implements a graduated
commission scale to motivate
sales persons to increase their
sales.
 DETERMINING GRADUATED COMMISSION
Andrew works in an insurance company
that pays him a graduated commission
based on the following scale:
› 5% commission on the first P5,000
worth of sales;
› 10% commission on the next P15,000
worth of sales and
› 15% commission on sales in excess of
P20,000
What is his total commission if he closed
a deal worth P25,000?
 COMMISSION ON INSTALLMENT BASIS
There are cases when salespersons
receive their commission on installment
basis, which means that the
commission is divided into a certain
number of payments depending on the
number of periods that has been
agreed upon. Typically, installment
commissions are applicable when the
prices of the products or services being
sold are relatively high and the client
has an option to pay on installment
basis.
 CALCULATING COMMISSION ON INSTALLMENT
BASIS

Amlong has a house and lot worth

P6,000,000, His sales agent will
receive a 10% commission if the sales
agent is able to sell property. A client
offered to give Amlong a 50% down
payment and to pay the remaining
amount on a monthly installment
basis for 1 year. Amlong accepted the
offer, and his sales agent agreed to
receive his commission based on such
arrangement as well.
 CALCULATING COMMISSION ON INSTALLMENT
BASIS

Determine how much the sales

agent would receive commission:
1. At the point of sale: and
2. On each succeeding month.
 SOLVE AND EXPLAIN
A company is selling prepaid load cards at
P100 each. It pays its sales agents
graduated commissions based on the
following scale:
› 1% commission on the first 100 cards
sold;
› 2% commission on the next 100 cards
sold; and
› 5% commission on sales of over 200
cards.
What is the total commission of a sales
 SOLVE AND EXPLAIN
In an insurance company, the salespersons
are given graduated commissions based on
the following scale:
› 1% commission on the first P10,000 worth
of sales;
› 2% commission on the next P20,000 worth
of sales; and
› 3% commission on sales in excess of
P30,000
Suppose that in addition to the commission,
as salesperson also receives a monthly
salary of P18,000. If he makes a sale of
P50,000 in one month, how much would be
his total pay that month?
 QUIZ NO. 2
OPEN NOTES!
FIND THE VALUE OF THE
MISSING VARIABLES, WHICH
ARE DEFINED AS FOLLOWS:
› S is the total sales
› C is the commission;
and
› r is the rate
 1
S P 30,000
C
r 3%
 2
S P 60,000
C P 6, 000
r
 3
S P 60,000
C P 6, 000
r
 4
S P 100,000
C P 30, 000
r
 5
S P 250,000
C
r 15 %
 6
S
C P 50,000
r 20 %
 7
S P375,000
C P75,000
r
 8
S P550,000
C
r 25%
 9
S
C P 182,000
r 45.5%
 10
S P 2, 500,000
C P 50,000
r
PART II. Tell whether the given problem
involves straight commission, salary-plus-
commission or graduated commission.
Then solve for the unknown quantity.

1. As a sales agent in a car

company, Tiffany earns a monthly
salary of P12,000 and a 2%
commission on her sales. On her
first month in the company, she
was able to sell a car worth
P900,000. How much was her
total pay that month?
-END-