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The document discusses the concept of commission in sales, defining it as a percentage of total sales based on a commission rate. It outlines the advantages of commission-based pay, such as motivating employees and managing payroll expenses, as well as disadvantages like excessive focus on earnings and potential negative team dynamics. An example calculation is provided to illustrate how to determine total sales from a given commission amount.

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harshvardhan.parmar
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3 views7 pages

Business

The document discusses the concept of commission in sales, defining it as a percentage of total sales based on a commission rate. It outlines the advantages of commission-based pay, such as motivating employees and managing payroll expenses, as well as disadvantages like excessive focus on earnings and potential negative team dynamics. An example calculation is provided to illustrate how to determine total sales from a given commission amount.

Uploaded by

harshvardhan.parmar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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BUSINESS MATHEMATICS AND

STATISTIC

ASSIGNMENT
BY -HARSHVARDHAN PARMAR
COMMISSION
01 DEFINATION

02 INTRODUCTION

03 ADVANTAGE

04 DISADVANTAGE

05 QUESTION
COMMISSION
A commission is a
percentage of total sales as COMMISSION = COMMISSION OF RATE * TOTAL SALE
determined by the rate of
commission.
INTRODUCTION
The commission they earn is calculated as a
certain percent of the price of each item they sell.
That percent is called the rate of commission.
Sales people often receive a commission, or
percent of total sales, for their sales. Their income
may be just the commission they earn, or it may
be their commission added to their hourly wages
or salary.
ADVANTAGES OF COMMISSION
1. Encourages employees to work harder
Highly talented professionals in sales and marketing get more out of commission-based pay since their income
relies on how hard they work. The more sales they make, the more generous their compensation will be
compared to their less motivated counterparts.

2. Helps manage payroll expenses


As for employers, compensating employees based on commission enables them to manage their payroll
expenses. Since the amount they give their employees depends on the sales or income they generate,
employers can keep costs down, particularly for employees who do not perform well. It’s also a great way to
develop a workforce that is proactive and motivated.
DISADVANTAGES OF COMMISSIONS
1. Becomes too focused on earning commission
Highly motivated salespeople can earn a lot of money, but in some cases, they can become too focused on
the commission. They will fail to fully explain their products or services to potential customers. Instead of
generating a sale, they can discourage people from buying their offerings. The same goes for overly
aggressive sales methods wherein new customers may be turned off by too much hard selling and other
high-pressure tactics.

2. Affects team dynamics


Commission-based pay can also affect the dynamics of a team. Working with colleagues who earn way more
than you do can trigger negative emotions such as envy and resentment.

CUSTOMERS
QUE - 1 An agent is entitled to get Rs. 2750 as commission at 5% on sales. 2 Find the amount
of sale.

Solution:

Amount of commission = Rs. 2750

52 Rate of commission = 5-1/2% = 5.5%

Commission = Total Sale* Rate of commission/100

TOTAL SALE = 2750 x 100/5.5

Total sale = 50,000

Hence, the amount of sale is Rs. 50, 000,

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