Which pay system ties earnings to the value of sales?

Which pay system ties earnings to the value of sales?

• A. Overtime
• B. Bonus payments
• C. Commission is a payment based on a percentage of sales
• D. Salary

Answer: (C)

When earnings rise with how much value a salesperson generates, the pay system is designed to reward sales success. Commission does this directly because it is calculated as a percentage of what is sold. So, as sales increase, the pay from commission increases, providing a strong incentive to close more deals and target higher-value sales. This directly ties earnings to sales performance. In contrast, overtime pay depends on extra hours worked rather than sales value; a salary is fixed regardless of performance; and while bonuses can be related to performance, they’re often discretionary and not necessarily a set percentage of sales. So commission best matches the idea of tying earnings to the value of sales.

When earnings rise with how much value a salesperson generates, the pay system is designed to reward sales success. Commission does this directly because it is calculated as a percentage of what is sold. So, as sales increase, the pay from commission increases, providing a strong incentive to close more deals and target higher-value sales. This directly ties earnings to sales performance. In contrast, overtime pay depends on extra hours worked rather than sales value; a salary is fixed regardless of performance; and while bonuses can be related to performance, they’re often discretionary and not necessarily a set percentage of sales. So commission best matches the idea of tying earnings to the value of sales.