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Write the base, period and relevant costs
For an established overseas business building U.S. sales, the question is what the proposed incentive measures and costs. Identify the worker or representative, the actual agreement and any applicable pay rules separately. An internal model is not permission to withhold wages, change earned pay or treat an employee as a contractor.
The U.S. Commercial Service’s representative-agreement checklist calls for clarity about pricing, profit potential, payment terms and support. It provides no universal commission basis or rate for this role.
Three proposed budgets for the same sale
Fictional comparison, all amounts in U.S. dollars: one sale is booked and delivered at US$20,000 with US$14,000 of specified variable delivery costs. At the chosen review date, US$15,000 has been collected. The contribution before commission and other omitted costs is US$6,000. The rates below are alternative invented budget assumptions, not actual pay entitlements or due dates.
| Proposed calculation | Commission amount |
|---|---|
| 5% of US$20,000 booked value | US$1,000 |
| 5% of US$15,000 collected by the review date | US$750 |
| 15% of US$6,000 defined contribution | US$900 |
A small commission change can accompany a large contribution loss
If the same delivery cost applies to a discounted US$18,000 sale, contribution falls to US$4,000. A 5%-of-bookings budget falls only from US$1,000 to US$900, while contribution before commission falls by US$2,000. A 15%-of-contribution calculation would change from US$900 to US$600.
This arithmetic does not prove how a salesperson will behave or which scheme is best. It shows the owner what each measure rewards and what a price concession costs. Check the actual discount authority, customer value and role responsibilities rather than assuming the percentage controls behaviour.
Reconcile the incentive with delivery and cash
Ask management how cancellations, returns, partial payment, refunds, shared accounts and extra support are handled in the actual proposal. Agree a clear definition and reporting period, and obtain the appropriate contract/pay assessment before use. Do not choose a base retrospectively because another amount is cheaper.
Keep the commission calculation outside the existing worksheet. Use its supported annual cost total in the unit-economics model, with the same revenue and cost assumptions. The tool does not interpret a compensation agreement or calculate every commission mechanism. Check payment timing separately in the wider cash plan.
Scope
- All rates and values are fictional. No normal commission, employment status, pay entitlement, lawful deferral, clawback or guaranteed incentive effect is established.
Next step
Document the proposed commission base, period and adjustments, resolve actual pay/contract requirements, and model the supported annual cost without pretending the calculator administers the scheme.
Sources & review notes
U.S. Department of Commerce — International Trade Administration
Passage, dates and research notes
official-guidance · Information to provide: pricing, profit potential, payment and support
Use the commercial information checklist only. The article’s termination, exclusivity, agent and jurisdiction statements are not adopted as law.
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