Sales commissions: a rule that calculates itself
Commission is the single most argued-about line between management and staff, and the reason is not the numbers — it is that it gets worked out outside the system. A spreadsheet at month end, somebody adding up invoices by hand, a return that gets missed, a disagreement over an invoice raised on the last day. The fix is to record the rule once and let the system compute it from the invoices themselves.
The idea in a minute
The rule lives on the job title rather than on each person — so a new hire inherits their role's rule from day one, and changing the rate is done once for everyone on it.
How it works
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1. The rule lives on the job title
You define a commission plan per job title: sales rep 2%, supervisor 1%, and so on. A new hire picks up their role's rule automatically with nobody having to remember to add them. And each employee's contract carries a switch to turn commission on or off for them individually when they are an exception.
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2. Three ways to express the rate
A flat percentage on all sales. Or tiers that step up with the month's volume — 2% up to a hundred thousand, 3% after that, with the top bracket open-ended. Or a fixed amount per invoice, when your business is about the number of deals rather than their size. You pick what describes your actual incentive, not what the system forces on you.
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3. Commission on specific categories only
Not every category earns the same margin, so it makes little sense for them to pay the same commission. You can have a plan price specific categories only, each at its own rate — rewarding the high-margin lines instead of paying the same on everything. The invoice is then priced on just the lines the plan covers.
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4. Who sold it? The question that comes first
Commission attaches to the salesperson recorded on the invoice, so an empty field means lost commission. That is why every till carries a setting: require a salesperson — the cashier must name one before closing any invoice on that machine, and cannot choose “no salesperson”. If the cashier is themselves registered as an employee, they are credited automatically without picking. And on a till that does not need one, the picker does not appear at all.
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5. Calculated once per period — and you review before it posts
Commission is not computed invoice by invoice as you go. You run a period, and the system reads that whole period's sales and works out what each employee is owed. The run's lifecycle is payroll's: the figures appear first without touching your accounting, you review them, and only after approval do they post. So a human looks at the numbers before they become a liability in the books.
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6. A return reduces the commission, and a correction never rewrites history
If a customer returns goods, the period's run sees the return and works out the correct amount — so the commission comes down with nobody reviewing it by hand. A correction is recorded as a new dated row for the difference between what was posted and what is owed, not an edit to what already posted. And re-running a period that has not changed posts nothing at all.
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7. Changing a rate does not rewrite the past
When you change a rate, the old plan closes on a date and the new one starts after it. Months already calculated keep the rate they were calculated with, and recalculating an old month reaches the same answer. That prevents the worst argument there is: an employee paid less on sales that were agreed at a different rate.
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8. One voucher pays the employee
The commission statement gathers everything an employee is owed into one figure, and a single voucher pays all of it. And commission does not count as paid until that voucher is actually confirmed — if it is rejected or voided, the amounts return to the queue instead of sitting there marked paid with nobody having received anything.
In short
A rule per job title: a percentage, tiers, or a fixed amount — with an optional monthly cap.
Require a salesperson at the till, so no commission is lost to an empty field.
The figures appear for review before they post, and a return reduces the commission in the period run.
One voucher pays what an employee is owed, and commission counts as paid only once it is confirmed.
Different ways to incentivise
A flat percentage
The simplest and clearest for the employee: every pound of sales pays a known rate. Good when your mix is uniform and you are not steering anyone toward a particular line.
Stepped tiers
The more they sell, the higher the rate. It rewards beating the target rather than scraping to it, and the top bracket is open-ended so there is no ceiling on ambition.
A fixed amount per invoice
When what matters is the number of deals rather than their size — subscriptions or standard products. Every invoice pays a known amount.
Commission on a branch's performance
Beside personal selling commission there is a second kind: an employee earns a percentage of a whole branch's sales in a category, whoever made the sale. Suited to a branch manager or a category owner. Several people can hold their own rate on the same branch, and each is paid in full rather than sharing a pool.
Still working out commissions in a spreadsheet?
Talk to us — we'll set your commission rule up in the system and show you a real employee statement computed from their own invoices.