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Business Terms
Commission
Definition
A fee paid as a percentage of a sale or transaction value.
Overview
Commissions incentivize sales by paying based on results. They're used for salespeople, agents, and affiliate marketers.
Example
A real estate agent earns a 3% commission on a $500,000 home sale = $15,000.
Best Practices
Define commission rates, when they're earned, and when they're paid clearly.
Common Mistakes to Avoid
Unclear earning criteria
Disputes over who earned commission
Late payment
Frequently Asked Questions
When is commission typically paid?
Usually after the sale closes or payment is received. Define this clearly.