Commission (remuneration)

The payment of commission as remuneration for services rendered or products sold is a common way to reward sales people. Payments often are calculated on the basis of a percentage of the goods sold, a way for firms to solve the principal–agent problem by attempting to realign employees' interests with those of the firm. Sales personnel are thus paid, in part of entirely, on the basis of products or services successfully sold rather than being paid by the hour, by attempted sales, or by any other measure. A common form of commission sales is real estate; in the United States, a real estate agent who successfully sells property will collect a commission of 6% of the sale price but a realtor who makes no sales will collect no salary or compensation whatsoever.

Commission (remuneration)

The payment of commission as remuneration for services rendered or products sold is a common way to reward sales people. Payments often are calculated on the basis of a percentage of the goods sold, a way for firms to solve the principal–agent problem by attempting to realign employees' interests with those of the firm. Sales personnel are thus paid, in part of entirely, on the basis of products or services successfully sold rather than being paid by the hour, by attempted sales, or by any other measure. A common form of commission sales is real estate; in the United States, a real estate agent who successfully sells property will collect a commission of 6% of the sale price but a realtor who makes no sales will collect no salary or compensation whatsoever.