Commission | Meaning and Definition

What is Commission?

It is a sum of money provided by an employer to an employee as a fee or proportion for completing a specific job or for attracting new business by selling the company’s goods or services. It’s also known as sales commissions or incentives in some cases. It can be received by anybody, not only salespeople. It is paid in addition to the pay.

The rate is determined by business policy, which guarantees basic wage plus commission over a set number of transaction closures.

In different areas, it has varied connotations. A commission is a request to do work in exchange for payment. 

Benefits Of Commission 

  • Since their compensation is based on how hard they work, highly competent sales and marketing professionals benefit more from commission-based pay. In comparison to their less driven peers, the more sales they produce, the more lavish their remuneration will be.
  • Employers benefit from commission-based compensation because it allows them to better control their payroll costs. Employers may keep expenses down by basing the amount they pay their employees on the number of sales or money they make. This is especially true when talking about employees who do not perform well. It’s also a terrific method to cultivate a proactive and motivated team.
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