Watch the Commission Calculations Video
Economics 201
The majority of your commissionable income will come from the gross profit on your hourly consultants. For every dollar in
gross profit the company earns on the consultants you place, Optomi will pay a percentage of that to you.
The commission percentages are grouped into a matrix and paid out a specific rate per deal based on the Gross Margin Dollars
of the deal and your total bi-weekly gross profit.
Your first few deals will all fall under the <5K in GP rates, which are 4.00%, 5.00% and 7.00%, depending on each deal’s GP
spread based on the dollar ranges noted above. As you add additional headcount your total bi-weekly spread will go up
as will your overall commissions. While it is presented as a matrix, you can also think of it as bonus commission on your biweekly
GP as it goes up. Each Bi-weekly GP spread tier, <5k, 5 – 10K, 10-20K, etc, is equivalent to an additional 1% per tier on
your entire bi-weekly GP.
Lets walk through some examples.
Commission Calculations
Suppose you have the following consultants, and for simplicity’s sake lets assume they each worked 80 hours over the past 2 weeks. Jimbo’s GP is $13.50 X 80 hrs = $1,080 bi-weekly GP
Greg’s Becky Jenny
GP is $28.00 GP is $16.00
X 80 hrs = $2,040 bi-weekly GP X 80 hrs = $1,280 bi-weekly GP
GP is $17.00
Total Bi-weekly GP = $5,760
X 80 hrs = $1,360 bi-weekly GP
We can use the bottom line of the commission table to look up the commission rate for each consultants GP spread.
Jimbo’s GP is $13.50 X 80 hrs = $1,080 bi-weekly GP X 4.00%
Greg’s Becky Jenny
GP is $28.00 GP is $16.00
X 80 hrs = $2,040 bi-weekly GP X 80 hrs = $1,280 bi-weekly GP
X 7.00% X 5.00%
X 5.00%
GP is $17.00
Total Bi-weekly GP = $5,760
X 80 hrs = $1,360 bi-weekly GP
ECONOMICS 201
Calculating Commissions
Now we can add the additional percentage based on the Total Bi-weekly GP of $5,760 (5 – 10K range) Jimbo’s GP is $13.50 X 80 hrs = $1,080 bi-weekly GP X 4.00% + 1.00%
Greg’s Becky Jenny
GP is $28.00 GP is $16.00
X 80 hrs = $2,040 bi-weekly GP X 80 hrs = $1,280 bi-weekly GP
GP is $17.00
Total Bi-weekly GP = $5,760
X 7.00% + 1.00% X 5.00% + 1.00%
X 5.00% + 1.00%
Simplify and you now have the rates from the Commission Matrix
Jimbo’s GP is $13.50 X 80 hrs = $1,080 bi-weekly GP X 5.00% = $54.00 Greg’s GP is $28.00 X 80 hrs = $2,040 bi-weekly GP X 8.00% = $163.20 Becky GP is $16.00 X 80 hrs = $1,280 bi-weekly GP X 6.00% = $76.80 Jenny GP is $17.00 X 80 hrs = $1,360 bi-weekly GP X 6.00% = $81.60
Total Bi-weekly GP = $5,760 Total Commission = $375.60
X 80 hrs = $1,360 bi-weekly GP
You could have also simply used the lowest tiered commission rates then multiplied the total Bi-weekly GP by 1% Jimbo’s GP is $13.50 X 80 hrs = $1,080 bi-weekly GP X 4.00% = $43.20
Greg’s GP is $28.00 X 80 hrs = $2,040 bi-weekly GP X 7.00% = $142.80
Becky GP is $16.00 X 80 hrs = $1,280 bi-weekly GP X 5.00% = $64.00
Jenny GP is $17.00 X 80 hrs = $1,360 bi-weekly GP X 5.00% = $68.00 Total Bi-weekly GP = $5,760 X 1.00% = $57.60
Total Commission = $375.60
ECONOMICS 201
Commission Calculations
Permanent Placement Fees are fairly straightforward. The fee obtained from the client, divided by the employee’s starting base salary is equal to the Perm Fee percentage. If you invoice the client for a $20,000 fee on a $100,000 base salary, the fee is 20% (20,000/100,000). The commission for a 20% Perm Fee is 8%, so on this deal you would receive $1,600 in com- mission(8%X$20,000). Thesamegoesforconversionsfeesaswell.
Keep in mind; you should always calculate the Perm Fee % based off of the fee to the client and the employee’s base salary, as opposed to what is stated in the contract. While the contract may say 20%, there could be caps on the amount of money given they will pay for direct hire. Conversion fees are typically lower the longer the consultant has been on billing prior to conversion.
Intro to Staffing Metrics