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Sales commission is a financial incentive paid to salespeople based on the sales they generate. It is usually a percentage of the sales amount or a fixed amount per sale, designed to motivate and reward sales performance.
Synonyms: sales incentive, sales bonus, commission pay, sales earnings
Sales commission motivates salespeople to increase their sales efforts, directly linking their earnings to their performance. This helps businesses boost revenue and encourages a results-driven sales culture.
Sales commissions are typically calculated as a percentage of the sale price or as a fixed amount per product or service sold. Companies may use different commission structures, such as tiered rates or bonuses for exceeding targets.
A salesperson might earn a 5% commission on every product sold. For example, if they sell a product worth $1,000, they earn $50. Some companies offer higher commissions for new customer sales or large deals.
