How to calculate commission
This is a very basic calculation revolving around percents. Just take sale price, multiply it by the commission percentage, divide it by 100. An example calculation: a blue widget is sold for
$70. The sales person works on a commission – he/she gets
14% out of every transaction, which amounts to
So the formula is:
commission_amount = sale price * commission_percentage / 100.
So now you know how to calculate commission. Then there’s a problem of who absorbs this cost – usually it’s the selling party (whoever hired the sales person to do the job). To calculate their revenue, we need to use a percentage decrease calculation.
real_revenue = sale_price - sale_price * commission_percentage / 100. In our example, it’s
$70 - $70 * 14 / 100 = $70 - $9.80 = $61.20.
It’s not very common, but sometimes it’s the buyer who pays for the sales person’s remuneration. In those cases we need a percentage increase formula:
price_with_commission = base_price + base_price * commission_percentage / 100. In our example, it’s
$70 + $70 * 14 / 100 = $70 + $9.80 = $79.80.
It’s often the case that you need to calculate a margin along with the commission. A discount becomes a subject, too. The real estate commission calculator is a specific application of the problem (check out the VAT version, too).