1.2
Commissions & Tips
WARM UP
W1. Change 13% to a decimal.
W2. Change 8% to a decimal.
Use mental math for the following problems:
W3. Find 10% of $762.40
W4. Find 20% of $43.60
W5. Find 15% of $60.00
WARM UP
W1. Change 13% to a decimal. 0.13
W2. Change 8% to a decimal.
0.08
Use mental math for the following problems:
W3. Find 10% of $762.40
$76.24
W4. Find 20% of $43.60
$8.72
W5. Find 15% of $60.00
$9.00
OBJECTIVES
Understand the different types of commissions
Be able to calculate commissions and tips
Be able to calculate overall pay when paid a
combination of base pay and commissions/tips
Commissions
Definition: An amount of money paid to an
employee for selling a product, usually a
percentage.
What jobs might receive commissions?
Types of Commission
Straight commission
Base (salary or hourly) plus commissions
Salary plus bonuses
Draw against commission (paid up front and if you
don’t sell enough, you owe the company)
Commissions
Example 1: A real estate agent earns her income
based solely on commissions, making 3% of the
purchase price of the homes she sells.
Example 2: A salesman at Nordstrom makes an
hourly wage of $8 an hour, plus 15% commission
on his sales.
Commissions
On your paper, list some pros and cons to making
commission.
Pros
Cons
Commissions
Pros
Cons
• Performance based – it
gives you control over
how much you earn
• The harder you work, the
more money you should
make
• Money is not guaranteed
• In a poor economy, you
may work hard and still not
be able to sell products
Tips
Definition: A tipped employee engages in an
occupation in which he or she customarily and regularly
receives more than $30 per month in tips. An employer
of a tipped employee is only required to pay $2.13 per
hour in direct wages if that amount combined with
the tips received at least equals the federal
minimum wage. (Also called “gratuity”)
(US Department of Labor)
What jobs typically receive tips?
Tips
Example 1: You go to the salon to get your hair
cut. The stylist charges $25 for the cut, but you
pay her an extra $5 for a tip.
Example 2: A server at a restaurant waited on a
large party. The waiter made $5 an hour and the
party left an 18% tip on a $200 check.
Tips
On your paper, list some pros and cons to making
tips.
Pros
Cons
Tips
Pros
Cons
• If you do a good job,
• Employers can pay less than
most people will leave
minimum wage so you have
some amount for a tip
to work hard to make up the
• You can earn well over difference in tips
the minimum wage
• Because it’s not a
requirement, sometimes
people won’t leave a tip or
leave a bad tip
Calculating Commissions and Tips
Part = %(in decimal form) x Whole
Amount earned just from the commission or tip
Calculating Examples
Ex 1: A car salesman earns
25% commission on all the
cars he sells. This month, he
sold a total of $32,500.
What was his commission?
Calculating Examples
Ex 1: A car salesman earns Commission = % x Whole
25% commission on all the
25% x $32,500
cars he sells. This month, he
.25 x $32,500
sold a total of $32,500.
What was his commission? Commission = $8,125
Calculating Examples
Ex 2: You go to a restaurant
and have a bill of $52.80. If
you want to leave a 20% tip,
how much more will you
need to leave?
Calculating Examples
Ex 2: You go to a restaurant
and have a bill of $52.80. If
you want to leave a 20% tip,
how much more will you
need to leave?
Tip = % x Whole
20% x $52.80
.20 x $52.80
Tip = $10.56
Calculating Total Income
Ex 1: An insurance agent
makes $1500 a month for
his salary and 10%
commission on policies
he’s sold. If he sells $6,500
in policies in a month,
how much money total
did he make that month?
Calculating Total Income
Ex 1: An insurance agent
Commission = % x Whole
makes $1500 a month for his
10% x $6,500
salary and 10% commission
.10 x $6,500
on policies he’s sold. If he
sells $6,500 in policies in a
Commission = $650.00
month, how much money
Total = Commission + Salary
total did he make that
$650 + $1500 = $2150
month?
Calculating Total Income
Ex 2: A salesman at a
furniture store makes $7.25
an hour and 15% of all sales.
This week he worked 40
hours and sold $6300 worth
of furniture. How much did
he make this week?
Calculating Total Income
Ex 2: A salesman at a
furniture store makes $7.25
an hour and 15% of all sales.
This week he worked 40
hours and sold $6300 worth
of furniture. How much did
he make this week?
Hourly = Time worked x Rate
40 x $7.25 = $290
Commission = % x Whole
15% x $6300
.15 x $6300
Commission = $945
Total = $290 + $945 = $1235
Objectives
Understand the different types of commissions
Be able to calculate commissions and tips
Be able to calculate overall pay when paid a
combination of base pay and commissions/tips
Homework
In Class Assignment 1.2
Homework 1.2