commission

Fee charged for facilitating a transaction. Commission is usually based on a percentage of the price paid by the consumer, and is normally received by an intermediary who deals with both the consumer and the supplier of the good or service. A salesperson, for example, will receive commission as a proportion of the monetary value of every sale they make. An insurance broker will be paid a commission, based on a percentage of the insurance premium, by the insurer of the risk. The commission was a convenient way of rewarding a broker for introducing business to a company. The advent of direct selling, and financial scandals such as the mismanagement of pensions, has led to a reappraisal of the commission method of payment, with many brokers offering a flat fee as an alternative.

Commission payments are a type of piece rate payment. Usually a worker is paid a basic wage and earns commission on top of that. However, some workers are employed on a commission-only basis where all their earnings are made up of commission payments.