How Do I Figure Sales Commission Paid for Building a Swimming Pool?

Swimming pool and pool house image by Jim Mills from Fotolia.com

Sales commissions are a great way for companies to motivate employees to create sales. A sales commission is a percentage of a sale that a salesman receives for closing a sale. Sales commissions may apply to any type of sales, including pool sales where a contractor builds a pool for the buyer. Each company chooses the percentage a salesman will receive for his sales, so this number will vary. The more a salesman sells or the larger the price he sells a pool for, the more money he will receive as his sales commission.

Research your company's policy on sales commission. Since each company has different policies, it is important to figure out the main components of the sales commission policy. Each company will offer a different percentage of the sale as sales commission. In addition, each company can also define sales price to base the commission on differently. As an example, one company may include contractor's fees as part of the sales price, whereas another company may exclude this cost when determining the sales price.

Determine the percentage you will earn as the sales commission. For example, say Firm A pays 15 percent sales commission on each pool sold and built.

Calculate the final sales price of the pool. This is where it is important to understand the sales commission contract. When calculating the sales price, be sure to only include the amounts the company includes in their calculation of the sales price and exclude any costs the company excludes. In the example, say an employee sold a pool to be built for $13,000. This cost included a $1,000 contractor fee, that the salesman's company does not include when calculating sales commission. Therefore, the sales price is actually, $12,000 when determining sales commission.

Multiply the sales price determined from the sales contract of the pool by the percentage of the commission. In the example, $12,000 times 15 percent equals $1,800 in sales commissions.

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About the Author

Carter McBride started writing in 2007 with CMBA's IP section. He has written for Bureau of National Affairs, Inc and various websites. He received a CALI Award for The Actual Impact of MasterCard's Initial Public Offering in 2008. McBride is an attorney with a Juris Doctor from Case Western Reserve University and a Master of Science in accounting from the University of Connecticut.

Photo Credits

  • Swimming pool and pool house image by Jim Mills from Fotolia.com