Sales discounts are amounts taken off a regular product price at the time of purchase to induce a customer to buy. Sales commissions are money paid to sales professionals as a form of incentive compensation after completion of a sale. While both motivate buying and selling activities, they are quite different.
The most significant difference between a discount and commission is their motive or purpose. Product or service sellers offer discounts in the form of percent off or other methods to attract customers. The idea is that a reduced price conveys greater value. A sales commission is usually a percent of a sale paid by an employer to a salesperson. The motive here is to give a seller added incentive to close sales.
The recipient of the financial benefit is different in a sales discount than a commission as well. A discount isn't paid out to anyone, but is rather a reduction in money collected by a business or seller from a customer. While the seller earns revenue from the sale, the customer receives the discounted price benefit. With a commission, the salesperson receives direct compensation from his employer upon completion of the sale.
The timing is also a point of difference between a discount and a commission. A discount is offered prior to a sale and granted at the point of purchase. A sales commission is also offered to a salesperson ahead of time, but he normally doesn't receive the earnings until after closing a sale. Commissions are often paid in addition to regular wages on biweekly or monthly paychecks.
The communication processes vary for discounts and commissions. Discounts are externally communicated as part of a company's marketing and promotion efforts with customers. They are often promoted through broadcast or print media and with in-store signage. Commission opportunities are usually communicated verbally or in writing to salespeople to motivate them. This communication usually comes from either human resources or a sales manager.
