What is a Commission?

A commission is a fee that a company pays to its sales staff for each sale they make. The amount of the commission is typically a percentage of the total sale price. Commissions provide an incentive for sales staff to make more sales, and can be a significant part of their income. They also help to align the interests of the sales staff with those of the company, as both parties benefit when more sales are made. There are different types of commission structures that companies may use, and these can vary based on factors such as the type of product being sold, the geographical area covered by the sales staff, and the experience level of the salespeople.

Sales Development
What are the different types of Commission Structures?

There are a few different types of commission structures salespeople can choose from. The most common are straight commission, base salary plus commission, and draw against commission.

1. Straight Commission: This is when salespeople receive a percentage of the revenue they generate. There is no guaranteed income, so this type of commission structure can be a bit risky.

2. Base Salary Plus Commission: This is when salespeople receive a base salary plus a percentage of the revenue they generate. This type of commission structure can be less risky than straight commission because salespeople have a guaranteed income.

3. Draw Against Commission: This is when salespeople receive a draw (advance) against the commission they will earn. This type of commission structure can be less risky than straight commission because salespeople have a guaranteed income, but it can also be more risky because salespeople may have to repay the draw if they don't earn enough commission.

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