The Commission Plan

A commission plan is a compensation structure used by companies to incentivize employees, typically salespeople, to sell more products or services. Under this plan, employees earn a percentage of the sales they generate, in addition to or instead of a regular salary. This motivates employees to increase their performance, aligning their financial rewards with the company’s success. For example, if a salesperson sells $10,000 worth of products and the commission rate is 5%, they earn $500. Commission plans vary widely in terms of rates and conditions, providing flexibility to both employers and employees.