Create Date: September 12, 2024
Last Modified Date: February 1, 2025
Calculating commission can be done simply with the two following variables:
The result will be a dollar amount. This amount of money is the amount to be paid out in commission according to your specified values. This value does not include any taxes or fees that are taken out before being distributed, this number is the raw commission amount to be paid based on the situation provided.
Calculate commission here with Totu, it is easy and efficient. To do so, follow these steps:
Let's say we are interested in becoming a real estate agent. We have an offer to join a company where we would make 2% of the total house sale amount in commission. We can use this tool to project just how much that may be.
Let's assess a house that is valued at $295,000. To get our answer we will enter 295,000 into the price field and then 2 into the commission percent field. We can now hit calculate and get a commission pay of $5,900 in this situation.
Commission isn't a new concept, it has its roots in the BC years. During this time the concept was the same, merchants and salesmen would sell items or goods and earn some money. This concept has not evolved much over time.
The real way commission has evolved over the years is by being introduced into new industries and different verticals. Commission is now found in basically everything like stocks, real estate, car sales, and basically anything else you can think of.
The reason commission began to be more common is because in the 1800s and 1900s companies began to realize that commission pay would motive salesmen to close more deals so they can get paid more at the same time generating more revenue for the company.
Commission is paid out depending on your employer. Commonly, it is paid out on a monthly basis.
Commission is not necessarily better than salary, but it often will allow those who are driven to work harder and make more since there is no earning cap, typically. The largest downside can be that your pay will be very little if you are not making many sales, making it harder to make ends meet.
The IRS treats commission as supplemental income, making it not regular income. They typically tax higher on other forms of income like this.
For the USA, commission must be taxed.
Understanding commission can be difficult if some of the terms and keywords used are not ones you understand. Here we shed some more light on some of these terms.
| Term | Definition |
|---|---|
| Commission | Commission is a type of pay that can be earned. When a good or service is sold the person who sold it would get a percent of that sale, that is the commission earned. |
There are many interesting things that can be shared about commission. Here are some of our favorites.
The highest commission earned is believed to be around $3 million from the sale of a mansion in Los Angeles for $100 million.
Some jobs are 100% commission based and there is no base salary pay. This means your entire take home pay is based on your performance.
Sports agents get commission on the contracts that their players sign. If they manage multiple athletes this can begin to add up fast.
Calculate the rate of employee turnover for a business with this tool.
Calculate the total percent change from a peak value to a new low of an investment.
Calculate the cost of acquiring a new customer for your business.
