Commission calculator does a very simple calculation for you - it calculates the percentage-based remuneration. As with any Omni calculator, it can calculate either way - start filling in any fields and the other ones will be calculated for you. There's nothing to worry about! Turn on the advanced mode and you'll see what happens to the base price when you either add or subtract the commission to/from it (depending on who covers the commission - the seller or the buyer).
How to calculate commission
This is a very basic calculation revolving around percents. Just take sale price, multiply it by the commission percentage, divide it by 100. An example calculation: a blue widget is sold for
$70. The sales person works on a commission - he/she gets
14% out of every transaction, which amounts to
So the formula is:
commission_amount = sale price * commission_percentage / 100.
So now you know how to calculate commission. Now that you have this figure, there's a problem of who will cover this cost - usually it's the selling party (whoever hired the sales person to do the job). To calculate their revenue, we need to calculate the percentage decrease:
real_revenue = sale_price - sale_price * commission_percentage / 100. In our example, it's
$70 - $70 * 14 / 100 = $70 - $9.80 = $61.20.
It's not very common, but sometimes it's the buyer who pays for the sales person's remuneration. In those cases we need the percentage increase formula:
price_with_commission = base_price + base_price * commission_percentage / 100. In our example, it's
$70 + $70 * 14 / 100 = $70 + $9.80 = $79.80.
It's often the case that you need to calculate a margin alongside the commission. You may also be offered a discount on your purchase (or you may offer one on a particularly hard sale). The real estate commission calculator is a specific application of this commission problem (check out the VAT version, too).