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How Does Commission Salary Work?


Formula

Commission-based salary

Commission-based salary = base salary + commission pay

Commission-basedsalary = base salary + commission pay

Example 1

As a student, Superman sold advertising space in the Daily Planet newspaper. His income was a base salary of $900, and in addition he got a 3 % commission on his sales. How much would Superman make in a month if he sold $10000 worth of advertising space?

In this case you need to know the base salary and the commission. Then you add the two numbers together. The text tells us his base salary is $900. So you need to figure out what his commission is for the advertising space he sold3.

Commission = 10000 3% = $300

Superman’s total income then becomes:

Monthly salary = base salary + commission = 900 + 300 = $1200

Monthly salary = base salary + commission = 900 + 300 = $1200

Superman made $1200.

There are a few more terms you need to be familiar with when calculating income. These terms are gross salary and net salary. Gross salary is simply how much income you make. Net salary tells you how much of your income you take home.

You might wonder why these two are not the same. The reason for that is that workers have to pay taxes to the government. In countries around the world, this tax money pays for public services, such as education, health care, roads, and public transport, to mention a few things. We will look closer at this below.

Rule

Gross salary

Gross salary is your income before taxes and other fees have been paid.

Rule

Net salary

Net salary is your income after taxes and other fees have been paid, which means that it is the amount of income you get to take home.

Formula

Net salary with growth factor

Net salary = gross salary (1 tax 100)

Example 2

How much did Minnie Mouse take home when she paid 35% in taxes on her monthly salary of $3300?

Net salary = 3300 (1 35 100) = 3300 0.65 = $2145 Minnie Mouse took home $2145 after taxes when she had a monthly salary of $3300 and paid 35 % in taxes.

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