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Commission based revenue

How to complete the revenue section if you are a comission based business
MV
Written by Max Valentine
Updated 8 months ago

One of the many ways that a company makes revenue is through commissions.  This is generally for services delivered during a "deal" or for management of someone else's assets.  Examples of this revenue model include Estate Agents, Asset Managers, Shipbrokers or Recruiters.

Commission is % of the Gross Value of something - Let's look at an estate agent as an example:

The business sells a house for £500,000 and has agreed a 1.5% sales commission.  This means that the revenue to the business for successfully selling the house is: 

500,000 x 1.5% = £7,500
Had the value of the property been higher then the revenue would have been higher and had the commission been higher then the revenue, again, would be higher.  So these are two key drivers - the Gross Value and the Commission level.
The other aspect is the how many houses that the business sells in the time cycle.  If the business sells 10 properties of the same value and commission in one month, we have the below:
10 x £7,500 = £75,000
This is another driver which gives us the full make up of commission revenue:
Gross Value x Commission Level x Volume of transactions
Now let's look at building commission revenue in Numberslides:
  1. Select the revenue from the dropdown menu
  2. Select Average Days Given
  3. Enter a "Project" name e.g. Commercial Property or Junior Candidates
  4. Click "Add Project"
  5. Next enter for each forecast year the Average Gross Value, Number of "Projects" per month" and % Commission Level
 You can then repeat this for other commission revenue streams.  It is as simple as that.
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