Commission is the remuneration of the labor of an intermediary (person or company) for the provision of services or support of a transaction / transactions on behalf of another person and at his expense.
Firms seeking to increase their turnover often resort to the services of intermediaries. Therefore, the commission fee is most often calculated as a percentage of the turnover achieved by the intermediary. It can take various forms.
Often a commission is applied in a linear form: the higher the turnover or volume of sales, the greater the amount received by the intermediary. In this form, the payment for work is easily calculated, in parallel, additional forms of promotion can be applied, but there are also disadvantages in it. For example, at a very high level of turnover achieved by the intermediary, his earnings may be higher than that of the head of the guaranteeing company. Naturally, in this case, the occurrence of tension in relations in the team is possible. In addition, the intermediary’s high earnings may lower his interest in using additional efforts to increase turnover / sales.
In Western countries, degressive commissions are often applied when the percentage of the turnover allocated to the remuneration of the intermediary decreases with an increase in sales / turnover. In this case, the correct calculation of the change in interest rates is very important, which would take into account the interests of the guarantor company and the contractor, otherwise he will not be interested in the growth of sales / turnover.
The commission in a progressive form, when with an increase in sales / sales growth also increases the percentage of the amount of remuneration, is often used in the sale of goods or services that are not in high demand. This form effectively stimulates intermediaries, but causes high costs for the guaranteeing company.
To speed up the sale of certain goods or services, firms often apply a special commission - increased interest on transactions with these goods / services over a certain period of time.
An example of specialties in which wages are calculated specifically in the form of a commission can be the work of an insurance agent - a person who officially represents an insurance company and draws up documents on personal insurance or property insurance.
This work is suitable for active, energetic people who can and love to communicate with people. Work as an insurance agent does not require special education, since each insurance company itself is engaged in the training of its employees at various levels (primary, with experience as an insurer, group managers). For the work of the insurance agent , such components of activity are important as professional ethics, service culture, knowledge of the rules and conditions of all types of insurance provided by the company, the ability to keep records of and report on their activities.
The responsibilities of the insurance agent include advising clients on all types of services provided by the employer company, assistance in choosing a product in accordance with the needs of the consumer.