How to Figure Commission When Paying

by C. Taylor

Commissions offer monetary incentives for employees to generate sales. If an employee receives the same pay regardless of his productivity, there's no motivation to improve performance. However, if his salary increases with every sale made, the employee will work harder to generate sales, because there's a direct benefit to his performance. Commissions are typically paid by percentage of sales, although there may be a minimum sales total required before receiving such commissions.

1. Tabulate the sales made by the employee.

2. Subtract the minimum sales total, if applicable. As an example, if employees receive an 8-percent commission on total sales over \$2,000, then you subtract \$2,000 from the total sales. If the employee made \$5,000 in sales, this results in a basis of \$3,000.

3. Multiply this value by the commission percentage, in decimal form, to calculate the commission. In the example, this results in \$240 in commissions.

4. Add this amount to the regular pay. As an example, if the employee received \$9 per hour for a 40-hour work week, you would add \$240 in commissions to \$360 regular pay to calculate a total paycheck of \$600.

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