The system calculates the final selling price by adding the commission to the Price Before Commission.
1. Price Before Commission
The Price Before Commission is determined by adding your COGS (Cost of Goods Sold) and your Margin:
COGS + Margin = Price Before Commission
COGS includes:
Equipment
Materials
Tax (units and parts ONLY)
Labor
Included Services (if applicable)
2. How to View the Calculation in the Proposal
In the Edit Proposal screen, you can follow the calculation step by step — similar to a running calculator. The program starts with:
Unit Cost
then Subtotal of Units & Parts
then Included Services, and so on — all the way down to the final selling price.
This allows you to visually confirm how each component contributes to the overall price.
3. Commission Calculation Method (Divisor Method)
Commissions are calculated using the divisor method, which ensures the commission amount is built into the selling price without causing a loss.
If we use a 10% commission as an example:
Method | Price Before Commission | Calculation | Sale Price | Result | Expected Payout | Outcome |
Percentage Add-On Method | $10,000 | $10,000 + 10% | $11,000 | $1,000 | $1,100 | Business loses $100 |
Divisor Method (Correct) | $10,000 | $10,000 ÷ 0.9 | $11,111 | $1,111 | $1,111 | Accurate and balanced |
Why it matters:
The sales rep’s commission expectation is based on the amount sold to the customer, not on the price before commission.
By using the percentage add-on method, you may unintentionally increase your payout cost beyond what was originally intended.
Using the divisor method ensures that commissions are accurately calculated based on the true selling price — maintaining consistency between the sales rep’s expectations and the business’s financial targets.