How to create a commission scheme?

Why do you need a Commission Scheme

A commission scheme is a framework or a system that outlines how individuals or sales teams are compensated based on their sales performance or other measurable criteria. It is commonly used in various industries, especially in sales, where employees or independent contractors receive a portion of their income as a commission for achieving specific goals or targets. The primary function of a commission scheme is to motivate and reward individuals or teams for their efforts in generating revenue or achieving certain objectives.

How to create a Commission Scheme with Biztory

1. Click Sales and go to Commission

2. Click on Add New

3. You'll encounter this form

3.1 Choose the Basis Type for your Commission

1. Revenue basis commission : A performance-based compensation plan for salespeople or commission earners and the salespeople technically earn commissions based on the total revenue they generate through sales.
   
   
2. Collection basis commission : When salespeople earn commissions only when payment is received from the customer for the sales they make and this technically means the commission payout might be delayed compared to a revenue basis structure, as it relies on actual collections.
   
   
3. Profit basis commission : Salespeople that earn commissions based on the net profit earned by the company on the sales they make and this profit considers factors like the sales price, product cost, or any other associated expenses.
   
   
4. Markup basis commission : Salespeople earn commissions based on the markup percentage, which is the difference between the cost price of an item and its selling price, so usually the higher the markup percentage they achieve on a sale, the greater their commission.
   
   
5. Redemption basis commission : Salespeople earn commissions based on the total redemption value of gift cards, vouchers, or loyalty points that they sell and this means that they are compensated only when the customer actually uses the purchased item, not just at the point of sale.
   
   
6. Quantity item sold basis commission : Salespeople that earn a predetermined commission amount for each unit of a specific product or service that they sell and typically the commission amount is fixed (for e.g; $5 per item sold)
   
   
7. Amount item sold basis commission : Salespeople that earn a predetermined commission amount for each unit off a specific product or service they sell, and it is most likely combines the two common basis which is quantity item sold basis and revenue basis.
   
   
8.  Refund basis commission : When a customer returns an item and receives a refund, the salesperson who made the initial sale might have their commission clawed back partially or entirely and this means the commission they earned on the sale is deducted from their future earnings. 

3.2 If you have a specific salesperson, choose here. Leaving it empty will apply to all salesperson

3.3 If there's cap limit for how much a commission can be earn, fill the Max Commission3.4 To set an amount of minimum sales required to receive this commission, fill the Min. Sales

3.5 If you have a specific product, choose here. Leaving it empty will apply to all product

3.6 Fill in the Commission Table

The key concept here is that the commission rate or amount can vary based on the sales achieved within specific sales range. This allows for a flexible and tiered commission structure, where different rates or amounts are applied as sales performance moves through different brackets or thresholds.

From: This field represents the starting point or lower bound of a sales range. It defines the minimum sales amount or threshold that must be met for a particular commission rate or amount to be applied.

To: The "to" field represents the ending point or upper bound of the sales range. It sets the maximum sales amount for which the specified commission rate or amount is valid.

Rate / Amount: This field indicated the commission rate or fixed commission amount that an individual or sales team will earn for sales falling within the defined range. The rate can be a percentage of the sales amount or a fixed monetary value.

eg; 

let's say you have the following entries in your commission table 

From : $0

To: $1,000

Rate: 5%

This means for the sales ranging from $0 to $1,000, the commission rate is 5%. So if someone makes a sale of $800, they would earn a commission of $$800 * 5% = $0

4. Once done, click Save and you have created your Commission Scheme

Have a Commission only for a fully paid invoice for the commission to work? Here's how to.

1. Be sure to choose Revenue for the Basis Type

2. Enable Fully Paid and Fully Delivered

3. And create your Commission Scheme like usual and you're done.

Have a Commission that you would want to deduct from a salesperson? Here's how to.

1. Choose Refund for the Basis Type

2. Choose a salesperson, and if empty, it will applies to all salesperson.

3. And create your Commission Scheme like usual and you're done.