How to Calculate Commission on Sales

If you are salesman or you have hired salesmen, you need to calculate the commission on sales. It is the earning of salesman but it is the expense of company who hires the salesmen. Following are steps of the calculation of commission on Sales.


1st Step : Classify the Product Sold

First of all you have to classify the products which have been sold by sales person. For example, commission may be given on car sales, property sales, insurance sales and other retail products. Cars are not daily basis, so, sales of cars are calculated on the basis of quarterly or six months. On this sales, we calculate the commission. There are some retail products whose commission can be calculated daily basis. In insurance sector, commission agent gets commission on his sold insurance policies. There is also law of insurance. As per this, there are different commission on first year premium paid by policy holder and other years except first year.

2nd Step : Calculate Simple Commission on Sales

If agent and retailer has fixed rate of commission on total sales by agent, then we can calculate commission on following formula.

= Sales X Commission / 100

If agent sold Rs. 1,00,000 and commission is 10% on sales, then agent's commission will be

= 1,00,000 X 10/100 = Rs. 10,000

3rd Step : Calculate Commission on Consignment Sales 

If agent is not employee of vendor, at that time, there will be consignment agreement between consignor and agent. Its commission on sales is just calculated on the basis of second step.

Del credere commission is calculated when agent takes the responsibility of all sales risk. When agent sells goods on credit, there is risk of bad debt. This loss will of consignor but if consignee or agent takes its responsibility, he has right to get one special commission whose name is del credere. It is calculated on gross sales. In gross sale, we will add both cash and credit sales. If consignee gets this type of commission, he will be responsible for paying the bad debt to consignor.

If we have to calculate the commission on sales in excel, we can use dollar formula. Following is its screenshot.




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Accounting Education: How to Calculate Commission on Sales
How to Calculate Commission on Sales
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