What is Commission?
‘Commission’ has different meanings based on the context. However, concerning sales and HR, ‘Commission’ is defined as a variable pay given for the products sold or the services provided.
Especially in sales, commissions are provided to the salesperson as an incentive to close more deals. It is set to a percentage of the sale in most cases. However, fixed commissions might also be provided in some cases, even though those are very rare in the industry.
Similarly, commissions might also be provided based on achieving a specific sales target within a stipulated time. The commissions are always set in such a manner that the salesperson’s interests align with that of the company. Some industries use the commission model more than others, for example, car sales, real estate, etc.