The process for the calculating of a commission is exceptionally straightforward and only involves the use of percentages.
1. Identify your sale price
2. Multiply it by your commission percentage
3. Divide it by 100
An example:
You are a car salesperson who gets two percent commission for every vehicle you sell. You sell a car for $10,000.
The commission amount = $10,000 (sale price) x commission percentage (2%) / 100
You made $200 in commission.
Then, who absorbs that cost? You will need to work out the revenue now, which you can do with a percentage decrease formula.
The revenue = the sale price – sale price x commission percentage / 100.
Revenue = $10,000 - $10,000 x 2% / 100
Or, if the buyer pays for the commission, you need to establish the percentage increase in the cost using the percentage increase formula.
Price with the commission = the base price + base price x commission percentage / 100.
If you are involved in retail, or you’re a salesperson, being able to understand figures and percentages is crucial. Otherwise, you will struggle to find out if you’re breaking even, and how far you can discount a product before you lose money. After you finish with a commission calculator, you may want to try out a margin calculator or a discount calculator. Both can be valuable sales tools.