Calculating Commissions

Our Learning Business Math software program contains over 35 topic areas. One of them is Calculating Commissions, and this page summarizes the main ideas of this topic. This page is intended for review, and is not a substitute for the interactive, self-paced tutorials of the MathTutor Learning Business Math program.

General Explanation

Sometimes an employer will pay a worker based on the amount of product or service the worker is able to sell. This amount is called a commission.

The amount the employer pays for each sale is known as a commission rate. A commission rate may be a specified amount of money for each sale or a percent of the value of the sale.

A worker will either receive a salary plus commission or just a commission. When the worker receives only a commission, they are said to work on straight commission.

The following formula can be used to calculate the commission based on sales:

Commission = Total Sales x Commission Rate

Sample Problem

Susan Pierce sells office equipment. She receives a straight commission of 6% of sales. If Susan has sales of $4700 during the week, what is her commission?

Solution

Let's use the formula for commission to find how much Susan earned. We will use .06 as the commission rate.

Commission = $4700 x .06 = $282

Susan earned $282 in commissions.

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