This lesson covers the topic Commissions.

1. Commission

2. Commission
• is a fee paid to person who makes a sale. The
commission is usually a percent of the selling
price.
𝐂𝐨𝐦𝐦𝐢𝐬𝐬𝐢𝐨𝐧 = 𝐑𝐚𝐭𝐞 𝐨𝐟 𝐂𝐨𝐦𝐦𝐢𝐬𝐬𝐢𝐨𝐧 × 𝐒𝐚𝐥𝐞𝐬

3. Types of Commissions
• Salary plus Commission
Commission with Quota
• Straight Commission
• Graduated Commission

4. Salary plus Commission
• is a type of commission where a person gets paid a
salary and a percentage of his/her sales.

5. Example:
• Jerome works for a company that sells lamps. He is
given a salary of ₱15,000 and a commission of 5% on
his sales. If his sales for the month of September
amount to ₱125,675.25, how much is his total income
for the month?

6. Commission with Quota
• is a type of commission where a person gets paid if
he/she reaches a certain amount of sales (quota) on a
certain term (weekly, monthly, or quarterly).

7. Example:
• Jason was hired to sell LED bulbs. He was told that he
will be given a monthly salary of ₱14,500 plus a 10%
monthly commission in excess of ₱10,000 worth of
sales. For the month of July, he was able to sell
₱32,000 worth of LED bulbs. How much was his total
income for the month?

8. Example:
• Mr. Cueva decides to work for ABX Company that will
pay him ₱3,500 per week and 6% of any sales above
₱3,000. If he sold goods worth ₱5,000, what is his
gross pay?

9. Straight Commission
• is a type of commission where a person is paid a
percentage of his/her sales only.

10. Example:
• Jerry was hired to sell a brand of air-conditioning unit,
with the understanding that he gets 15% commission.
For the month of April, he was able to sell three air-
conditioning units priced ₱18,900, ₱28,753, and
₱23,576, respectively. How much was his commission
for the month?

11. Example:
• Karyl works on a “commission only” basis and
receives 30% on her monthly sales without a base
salary. What is her commission during a month
when she sells ₱108,000 worth of appliance, compute
for the commission?

12. Graduated Commission
• is a type of commission where the percentage
changes based on how much someone sells. Most of
the companies encourage their agents to sell more
goods.

13. Example:
• Jaycee works for a company that sells herbal
medicines. For the month of May, his sales totaled
₱62,785. If his contract states that he gets 10%
commission on the first ₱30,000, an additional 3% on
the next ₱20,000, and an additional 2% for sales
beyond that sales volume, how much was his
commission on the month?

14. Example:
• Mary has a monthly commission plan where she
receives 2.5% on the first ₱100,000 of sales during
the month and 3.5% on the sales above ₱100,000.
If her total sales during the month is ₱150,000,
compute her commission.

15. Activity
• Abigail works at Furniture Shop and earns ₱350 per hour plus 6%
commission on sales. Last week Abigail worked 40 hours. What was
Abigail’s weekly gross salary if her total sales were ₱25,000?
• Sophia earns straight commission selling cell phone contracts. Last
month she sold 341 cell phone contracts worth a total of
₱238,192.00. If Sophia earns a 5% rate of commission, what was her
gross income last month?
• Monaliza makes a basic monthly salary of ₱8,500. As a sales agent of
food supplement products, she is required to sell ₱45,000 worth of
products per month. She is also getting a 7.5% commission on all sales
beyond the monthly quota. As an incentive for outstanding performance,
an additional 10% bonus on top of the normal commission rate for any
sales beyond ₱80,000 is given. If Monaliza sold ₱157,200 worth of
products this month, what is her total income for the month?

16. Assignment:
• Answer page no. 117-118, nos. 7 and 8. Write your
answers in a clean paper.

17. Commissions on
Installment Basis
• commission is based on
the payment collected
from the customers
depending on the
commission structure.
Commissions on Cash
Basis
• commission is based on
the total amount of
sales given in cash
basis.

18. Example:
• A salesman was able to sell an expensive branded bag
worth ₱450,000 and is paid on a monthly installment
basis of ₱50,000 for 9 months. If his commission rate
was 3%, how much would be his monthly commission
for 9 months? How much would be his total
commission?

19. Example:
• Anne is a salesperson at the ABC Gadget Store. She was
able to sell five laptops that costs ₱36,000 each. At the
time that the deal was made, there was a store promo that
states that the customer may pay the amount in 6 months,
wherein the total price to be paid is divided into 6 equal
monthly installments with 0% monthly interest. Anne
gets a 2% commission on the first month of payment, and
decreases 0.30% every month thereafter. The commission
is based on the outstanding balance of the month. How
much will be her total commission at the end of the
month?

20. Insurance Commissions
• Insurance commissions depends on the variety of
commission structure a client will take.
• The following are the common types of commissions
with a variety of commission structure:
Commission on Life Insurance Sales
Commission on non-life Insurance Sales
Commission on Vehicle Sales

21. Insurance
Companies
(insurer)
Client
(insured)
Policy

22. Policy Lifespan of the agreement
Amount to be paid every
month/quarter/semi-
annual/year (premium)
Other items as agreed by
both parties

23. Commission on Life Insurance Sales
• Commission on life insurance sales depends upon the
premium paid by the client. Normally, the commission
rate ranges from 30% to 90% of the premium paid by
the client on the first year, and decreases on the next
succeeding years depending on the agreement
between the insurance company and the financial
advisor (insurance agent).

24. Example
• A life insurance agent gets 40% commission on the
premium of every new life insurance policy, 10% on
the second year, and 5% on the third year. On a
particular month, an agent was able to sell 3 life
insurance packages with annual premiums worth
₱36,000, ₱54,000, and ₱62,400. If the insurance
company allows the agent to have a commission for 3
consecutive years, how much commission would the
agent get?

25. Commission on Non-life Insurance Sales
• Commission on non-life insurance sales also depends
on the premiums paid by a client annually but the
commission that an agent receives is at a fixed rate
regardless whether the premium is paid in cash or
installment.

26. Example
• A building insurance company gives its agents a 15%
commission on the annual premium paid by clients. If
a 25-story-building of RRR Company which have a
total premium of ₱200,000 was insured to the
insurance company, how much would be the agent’s
commission?

27. Commission on Vehicle Sales
• Commission for vehicle sales purchased on
installment basis give the sales agent a fixed rate
ranging from 2% to 3% called the agent’s commission.
• Commission for vehicle sales purchased depends
upon the amount to be financed by the bank.

28. Key terms
• Down payment-initial payment made
• Gross Balance - amount to be financed by the bank
- difference between the selling price of
the vehicle and the down payment paid.

29. Example
• Marvin gets a fixed commission of ₱6,000 for every
car that he can sell as an incentive. As a car agent, he
must sell at least one unit of car per month to get
2.5% commission from the bank where the buyer
applies his car loan. On a particular month, Marvin
sold ₱850,000 and ₱920,000 worth of cars at 20% and
40% down payments, respectively and the balance to
be applied for bank financing. Combining his
incentives and commissions from the bank, find his
total earning for the given month?

30. Assignment
• Aira is a salesperson at the Cell City Gadget Store. She was
able to sell three laptops that costs ₱40,000, ₱68,000, and
₱72,000. At the time that the deal was made, there was a store
promo that states that the customer may pay the amount in 5
months, wherein the total price to be paid is divided into 5
equal monthly installments with 0% monthly interest. Aira
gets a 2.5% commission on the first month of payment, and
decreases 0.25% every month thereafter. The commission is
based on the outstanding balance of the month. How much
will be her total commission at the end of the month?

31. Assignment
• A life insurance agent gets 50% commission on the premium
of every new life insurance policy on the first year, 8% on the
second year, and 5% on the third year. On a particular month,
an agent was able to sell 3 life insurance packages with annual
premiums worth ₱60,000, ₱50,000, and ₱72,000. If the
insurance company allows the agent to have a commission for
3 consecutive years, how much commission would the agent
get?

32. Assignment
• A car dealer is giving a fixed commission rate of 1% of the
Suggested Retail Price (SRP) for every car that his sales
advisor can sell. In addition, banks also give 1% commission
on the balance of cars that will be financed by the bank. A
sales advisor was able to sell cars worth ₱1,200,000 and
₱1,500,000 with 25% and 40% down payments and applied
the balance for bank financing. Find the total earnings of the
sales advisor.

33. References
• Cabasisi, Irishgel M. (n.d.). Business Mathematics: Quarter 2-Module 10. Retrieved at:
https://www.studocu.com/ph/document/nueva-ecija-university-of-science-and-
technology/bachelor-of-science-in-business-administration/business-mathematics-
module-10-commissions/13821042
• Elenzano, Mercurio T., et. al. (2018). Math in Today’s World: Business Mathematics.
Quezon City: The Phoenix Publishing House, Inc.
• https://www.investopedia.com/articles/financial-careers/08/become-insurance-
agent.asp#:~:text=Typically%2C%20a%20life%20insurance%20agent,%22%20or%2
0%22trailing%20commissions.%22
• https://www.alamy.com/stock-photo/cartoon-herbal-medicine.html?cutout=1
• https://www.istockphoto.com/illustrations/air-conditioning-cartoons
• https://www.freepik.com/premium-vector/set-table-work-lamps-desk-bulbs-
torcheres-modern-design-with-colorful-shades-electric-supplies-home-decor-room-
illumination-isolated-white-background-cartoon-vector-illustration_19379089.htm
• https://www.pngwing.com/en/search?q=cartoon+light+bulb
• https://www.flaticon.com/free-icon/commission_2405293