Commissions, Royalties, & Piecework Pay Unit 2A - Finance

Pay Plans Yesterday, we covered: Annual Salary – paid by the year Hourly Pay – paid by the hour What other types of pay plans are there? Commission Paid according to money from sales; usually expressed as a % Royalty Paid according to money from sales (you are not seller) Piecework Pay Paid according to units produced

Commission Some jobs that get paid commission: Real Estate Agent Salesmen for department stores TV – Sales Any type of sales job

Royalties Some jobs that pay royalties Author Movie Director Actor/Actress Musician

Piecework Pay Jobs that have piecework pay plans: Newspaper delivery Field workers (pick corn, strawberries, etc) Factory workers

Advantages vs. Disadvantages As an employee, what are the advantages of being paid commission or piecework? What are the disadvantages? As an employer, what are the advantages of being paid commission or piecework?

Example 1: Dan wrote a textbook for high school students. He receives10% royalty based on total sales. The book sells for $47.95 and 17,000 copies were sold last year. How much did Dan receive? 17,000 x 47.95 = 815,150 815,150 x .10 = 81,515

Example 2 Allison sells cosmetics part-time. She is paid a monthly commission. She receives 11% of her first $900 in sales and 17% of any balance above $900. Last month she sold $1,250 worth of cosmetics. How much commission did she earn last month? 900 x 0.11 = 99.00 1,250 – 900 = 350 350 x 0.17 = 59.50 99.00 + 59.50 = 158.50

Example 3: Tony picked strawberries and gets paid a piecework rate of 45 cents per container for the first 200 containers picked. He receives 65 cents per container for every container over 200. Last week Tony picked 270 containers. How much did he earn? 200 x 0.45 = 90 270-200 = 70 70 x 0.65 = 45.50 90 + 45.50 = 135.50