Tiered commission plans calculate a commission on all the rates for the defined sales ranges. You can use tiered commissions to encourage salespeople to sell products in a defined range by offering higher commissions for that range.
The following example describes a commission earned from gross profit dollar (GP$) and calculated on GP$ for tiered calculations.
For this commission plan:
The commission base is GP$. This base is used to determine the commission amount.
The Commission Range Type field is set to GP$, so the Range fields display GP$ Range Minimum and GP$ Range Maximum. The salesperson earns the commission rate defined in each range.
In this example, the sales earned a gross profit dollar amount of $1200.00, which reached the highest percentage in the GP$ range. This amount qualifies the salesperson to commissions defined at each range, as described in the table below.
|
GP$ Range defined for salesperson |
GP$ amounts sold at each range. |
Commission percent calculated |
Commission |
|
$0.00 to $ 200.00 |
$200.00 |
2% |
$4.00 |
|
$200.01 to $500.00 |
$300.00 |
3% |
$9.00 |
|
$500.01 to $1000.00 |
$500.00 |
4% |
$20.00 |
|
$1000.01 to $9999999.99 |
$200.00 |
5.5% |
$11.00 |
|
Total commission: $44.00 |
|||
This salesperson earned a total commission of $44.00. If the commission plan were set up without tiered commission calculations, the salesperson would earn a commission of 5.5 percent on $1200, which equals $66.00.
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