How to solve algebra problems about sales commission
What’s the formula for calculating commission?
In this lesson we’ll learn how to calculate the commission earned.
What is commission? Commission is the amount of money a salesperson earns on the sale of an item.
The formula for commission:
???\text{Commission} =\text{Sale Price} \cdot \text{Commission Percentage}???
How to solve algebra problems about sales commission
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More step-by-step commission examples
Example
A wax warmer business advertises that you can make ???25\%??? commission on sales of their product. If you make ???\$2,500.00??? in sales how much money did you earn?
To find your commission, we multiply the sale price by the percentage.
???\$2,500.00 \cdot 25\%???
???\$2,500.00 \cdot 0.25???
???\$625???
You earned ???\$625??? for selling ???\$2,500.00??? worth of product.
People who sell clothes often work on commission plus an hourly salary.
Example
An employee at a clothing store earned ???\$450.25??? in hourly pay for the month. He also sold ???\$3,500.00??? worth of merchandise and plans to earn a commission of ???8\%??? on those sales. What is the employee’s expected paycheck before tax deductions?
First find the amount he earned in commission.
???\$3,500.00 \cdot 8\%???
???\$3,500.00 \cdot 0.08???
???\$280.00???
Now calculate the total amount.
???\$450.25 + \$280.00???
???\$730.25???
The employee should expect ???\$730.25??? on his paycheck.
People who sell cars often earn a yearly salary and commission on sales.
Example
Stephanie earns ???\$42,000.00??? per year plus a commission of ???15\%??? on all the cars she sells. If she wants a yearly salary of ???\$67,200.00???, how much money in car sales does she need to make?
We know she wants to earn
???\$67,200.00-\$42,000.00???
???\$25,200.00???
This is the amount she needs to earn in commission. That means
???\$25,200.00 = 15\%x???
where ???x??? is the amount of money from car sales.
???\$25,200.00 = 0.15x???
???\frac{25,200.00}{0.15}=x???
???\$168,000 = x???
This means to earn a salary of ???\$67,200.00??? Stephanie needs to sell ???\$168,000.00??? worth of cars.