A percentage commission checked against a target, in made-up numbers (not a suggested rate)
What goes in
- Average order and margin
- 80 in your currency, 50% gross margin (made up)
- Commission
- 15% of the order
- Sales
- 4 per ambassador each month, 25 ambassadors
- Fixed cost and target
- 500 a month; keep a 30% margin
What comes out
- Commission per sale: 15% of 80 = 12. Left per sale: 40 gross profit - 12 = 28, which is 35.0% of the order.
- Each month: 4 x 25 = 100 sales, 1,200 paid out, and 28 x 100 - 500 = 2,300 left.
- Highest commission that breaks even: 40 - 5 fixed cost per sale = 35, which is 43.8% of the order.
- To keep a 30% margin: 80 x (50% - 30%) - 5 = 11 per sale, 13.8% of the order, so 15% is above the target.