Here's how to do a simple commission calculation.

Our advice to know how to calculate commissions

At Maslo, we have implemented an innovative system to allow all companies to easily calculate the commissions of their employees. Based on the principle of gamification, it ensures remuneration budgets calculated correctly.

To set it up, and to understand how to do a Commission calculation, it is essential to take into account a certain number of criteria.

Define the structure of the commission

The aim here is to calculate the commissions and to define the commission structure. This involves answering several key questions like these:

• What will be the basis of the commission? Commissions can be calculated based on gross sales, profit margin, number of products sold, or other performance indicators. It is essential to determine what criteria will be used to calculate the commission;
  

• What will the commission rate be? The commission rate is the percentage of the total sales amount that will be paid to the seller. It may vary depending on various factors such as the product or service sold, sales volume, or other criteria;
  

• Will there be levels or thresholds? Some commission plans include tiers or thresholds, which means that the commission rate may vary based on performance. For example, a salesperson may receive a higher commission rate once they have reached a certain sales threshold;
  

• How long will it take to pay commissions? It is important to specify when commissions will be paid. This can be monthly, quarterly, or at other intervals. However, thanks to our application, you can ensure a quick distribution of commissions at the end of each month.

Collect sales data

Once the commission structure is defined, it is time to collect the sales data needed for the calculation. This involves collecting information on all sales made by salespeople, including the amount of each sale, the date of the transaction, and any other relevant details.

With our application, connect your tools to your CRM, ERP and HRIS systems to collect and organize this data. Maintaining accurate and up-to-date data is essential to avoid commission calculation errors!

Use our native integrations and our public API or import your rewards directly into the control space.

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Calculate commissions

The calculation of commissions may vary depending on the complexity of the commission structure chosen. However, here are some examples of common calculations that you can choose for your structure.

Your choice is made in part according to your field of activity and your goals.

• Calculation of the commission based on the total amount of sales;
  

• Calculation of the commission based on the profit margin ;
  

• Calculating the commission with levels ;
  

• Commission calculation with thresholds.

Communicate results

Once commissions have been calculated, it is essential to communicate the results to sales representatives in a clear and transparent manner. Provide detailed commission statements that explain how commissions were calculated. This allows salespeople to understand their compensation.

By giving them quick and easy access to an application like ours, give your salespeople the opportunity to consult their commission statements in real time so as to know if they are close to reaching the next commission level.

They also keep their monthly history and can consult it at any time!

At the end of each month, in one click, the reports are exported to the services concerned for validation.

Calculating commissions is an important process to understand if you want to reward the performance of your salespeople and motivate them to reach their sales goals. By defining a clear commission structure, collecting accurate sales data, performing appropriate calculations, verifying results, and communicating effectively with your employees, you can set up an effective variable compensation system that promotes business growth and the satisfaction of your teams!

To support you in this project, our team is at your disposal.

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