TEACHING AND LEARNING SALES COMMISSIONS LESSON PLAN - WAGES SALARIES BONUSES JOB REP CAREER WORKSHEET WORD PROBLEMS - EMPLOYEE COMPENSATION BASICS INTRODUCTION REAL WORLD LIFE SKILLS EXERCISES EXAMPLE THEMATIC UNIT CURRICULUM

# EARNING MONEY ON COMMISSION

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Many people earn money by commission.  Use this lesson and worksheet to learn about earning money on commission.

 LESSON LEARNED     Commissions   Earning Money

 OTHER SKILLS REINFORCED Basic Math Percentages

 SUGGESTED GRADE LEVELS   7+ Career Life Skills

 Suggested Lesson Plan for this Worksheet   One way that people earn money is by commission.  A commission is a percentage of sales or profit of items or services being sold, or a fixed amount per sale.  For example, a person selling books may earn 10% of every book sold.  If \$1000 of books are sold, then \$100 in commissions are earned.  Types of jobs that often include a commission include car sales, real estate, etc.  Commissions are used as a way for companies to motivate employees.   The amount of money earned by an employee is called gross pay.  The actual amount of money received is net pay, or the amount after deductions such as taxes.  See our other money lessons for further information on gross and net pay, and taxes.   Commission compensation arrangements may vary by industry, but here are some common types:   Straight commission With a straight commission, the individual only receives a percentage of the sales made.  No additional compensation is given or guaranteed.   Base plus commission Often, besides the percentage of sale or profit, one working for commission may receive additional compensation.  This salary may include 'base', or base plus commission.  For example, a book sales person may earn a \$1000 base plus 10% of every book sold.   Draw against commission Another commission compensation method includes a draw, or draw against commission. With a draw, the company will guarantee a certain amount of pay.  If the salesperson's commission is below that amount, then they will receive the draw amount.  The salesperson is expected to pay back the difference between the commission earned and the amount received from the draw.   Other things to consider include: Is the employee paid for expenses, such as travel and entertainment? Is pay based on sales or collections (when the money is collected from the buyer)?     Questions for Discussion: What type of jobs tend to pay by commission? (car salesperson, real estate, retail store salesperson) Why is earning money by commission good? (if you do well you earn more money, your interests are tied more directly to the business -- earning a profit) Why would you not like to earn money by commission? (more risky if you are not able to make enough sales, pushy salespeople) Will you get the full commission amount in your paycheck? (no, commissions are taxable -- taxes are deducted)     Vocabulary to understand: Commissions Wages Salary Base Draw Gross Pay Net Pay Collections Bonus WORKSHEET Instructions   This is a random word problem worksheet on earning money, salary, and commissions. You may choose a standard worksheet or customize the worksheet to your teaching needs.   To customize the worksheet, you have several selections.  First, choose number of questions.  Single question worksheets make for good reviews or introductions.  Two different worksheet formats are available, single line format with picture (picture is optional) or box format.  Remove the picture or choose box format for older students.   Make your selections, then press the "Get Worksheet" button.

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