Calculating the Commissionable Part of a Gross Fare
If you're math-challenged, here's the simple formula: Total Sale divided by 1.(Tax Rate) = Base Room Rate
EXAMPLE: If the total bill is $166.88 and the tax rate is 12%, then 166.88/1.12 will give you a base rate of $149
FURTHER (for the TRULY math-challenged): $149 x 10% means there's $14.90 in commission (149 x .1)
And for those who need to see the work:
The total of the sale is $166.88. Tax is 12%. I get 10% commission on the room rate. How much will I make?
Room rate = R Tax rate = .12 Total sale = 166.88
R + (.12 x R) = 166.88
R + .12R = 166.88
1.12R = 166.88
R=166.88/1.12 (divide each side by 1.12)
R=149 (room rate = $149.00)
$149 x .1 = $14.90 (.1 = 10% commission)
What if you need to work it backwards?
Let's say you just got paid $22.50 as your 75% cut of some commission on a room-only sale. You're assuming commission was 10% of the base rate, but you don't know how much that was.
Well, if $22.50 represents 75% of the total commission (C), the equation is 22.50=.75C. Divide each side by .75 to find that C=30.
Now that we know $30.00 is the total commission, we can make the equation 30 = 10% of R (where R is the room rate). Divide each side by 10% (.1) and you have 300=R. So, your $22.50 commission payment was 75% of the 10% commission payment on $300!
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