Commission

A remuneration paid by consignor to consignee or to seller by producer of goods for sale of goods or for provide services is called commission.

The payment of commission as remuneration for services rendered or merchandise sold is a common way to reward sales individuals. Payments typically will be calculated on the basis of a share of the goods sold. this can be some way for companies to resolve the principal–agent problem, by attempting to realign employees' interests with those of the firm.

One of the most common means of trying to align principal and agent interests is to design a contract with incentives that track agent performance. The principal–agent theory provides an explanation for the dissimilarities across the marketing companies in the varieties of compensation plans employed by them, like mounted salary, straight commission or a combination of each fixed salary and straight commissions.