Commission is a form of an incentive pay made to employees based on the value of sales achieved.
Employers benefit from paying a commission to their employees because it means that they only pay the employee if there is a sale. This helps to improve the cash flows of the business.
Formula to calculate commission.
Example:
Helen is a realtor. She receives 5% commission when she sells a house. How much commission will she receive for selling a house that cost $30,000.
Therefore, Helen’s commission is worth $ 1,500.
