To calculate the Draw Commission (DC):
\[ DC = \left( \frac{S \times R}{100} \right) \]
Where:
A draw commission is a type of compensation structure often used in sales roles where an employee receives a predetermined amount of money, known as a “draw,” at the beginning of a pay period. This draw is then deducted from the commission they earn during that period. If the employee does not earn enough commission to cover the draw, they may owe the company the difference, depending on the company’s policy. This system is designed to provide income stability for commission-based employees, while also incentivizing them to generate sales.
Let's assume the following values:
Using the formula:
\[ DC = \left( \frac{10,000 \times 5}{100} \right) = \$500 \]
The Draw Commission is $500.
Let's assume the following values:
Using the formula:
\[ DC = \left( \frac{20,000 \times 7}{100} \right) = \$1,400 \]
The Draw Commission is $1,400.
