The Tiered Commission System is a model that involves a progressive collection of commission on the value of the order plus taxes. Instead of applying a single commission to each order, it is calculated dynamically based on the sections it involves. This type of model is usually used to calculate taxes (Tax Brackets).
Our commission model has four sections that we will detail below. You will be able to see that the commission percentage associated with each section decreases as the rank increases: higher ranks add increasingly smaller commissions.
Commission percentage | Order range | Maximum Total Commission |
You will pay 21% for amounts between | $0 and $25 | $5.25+TVA |
14% will be added for amounts between | $25.1 and $40 | $5.25 + $2.1 = $7.35+TVA |
11% will be added for amounts between | $40.1 and $100 | $7.35 + $6.6 = $13.950 +TVA |
6% will be added for amounts greater than or equal to | $100.1 | $13.95 + $6 every $100 extra of the order + TVA |
The maximum total commission is the maximum cumulative amount you could pay up to that bracket. This value considers the sum of the previous section(s) plus the current section.
A common mistake in understanding this model is to think that a single percentage is applied to the entire order, according to the range associated with the total. Below we show you how it really works through an example:
Example 1:
A customer places an order for $37,5 in your store at TrakiTrak. To calculate the commission for that order, we will do the following calculation:
$25 x 21% = $5,25 (Tranche 1)
$37,5 - $25 = $12,5 → $12,5 x 14% = $1,75(Tranche 2)
Combined commission = $7 + VAT
Example 2:
A customer places an order for $136 at your store. To calculate the commission for that order, we will do the following calculation:
$25 x 21% = $5,25 (Tranche 1)
$40 - $25 = $15 → $15 x 14% = $2,1 (Tranche 2)
$100 - $40 = $60 → $60 x 11% = $6,6 (Tranche 3)
$136 - $100 = $36 → $36 x 6% = $2,16 (Tranche 4)
Combined commission = $16,11 + TVA
As you can see, the percentage applied to each section is calculated by discounting the previous section, considering only the value that is added. In the case of the second example, for the fourth tranche the added value is $36 over the $100 of the previous tranche.
The combined commission is obtained from the sum of the commissions of each section. In the case of the first example, the combined commission is $7 which is 18.7% of the order amount ($37,5). In the second example, the combined commission is $16,1 which is 11.8% of the order amount ($136).
As you can see in this graph, as the order value increases, the combined commission percentage decreases.
