What Is Commission?
Commission is pay calculated as a percentage of the sales a person makes or the value of the transactions they handle. It is common in sales, real estate, recruiting, and affiliate marketing. With a flat rate the same percentage applies to all sales; with a tiered plan each band of sales earns its own rate.
Flat Commission
Commission = sales × rate. Sales of 25,000 at 6% earn 1,500.
Tiered Commission
Each rate applies only to sales within its tier. With 5% up to 10,000 and 8% above, sales of 15,000 earn 10,000 × 5% + 5,000 × 8% = 900, an effective rate of 6%.
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🔗 Related Terms
More Income & Work Terms
- Billable Hours
- Billable Utilization Rate
- Bonus
- Business Overhead
- Cost to Company (CTC)
- Cost-of-Living Adjustment (COLA)
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Last updated: September 27, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.