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Incentive vs. Commission: What's the Difference?

Edited by Sumera Saeed || By Sawaira Riaz || Updated on October 14, 2023
An incentive motivates or encourages a desired action, while a commission is a specific amount paid for completing a sale or transaction.

Key Differences

At the core, both "incentive" and "commission" deal with motivation and compensation, but in different manners. An incentive serves as a motivation tool, whether monetary or otherwise, to drive desired behaviors or performance. Commission, on the other hand, is specifically a monetary compensation given to employees, often salespeople, based on the sales they make.
Sawaira Riaz
Oct 03, 2023
The realm of incentives is vast. They can take numerous forms – from bonuses, rewards, benefits to non-monetary perks like additional leave days. The primary objective is to boost motivation or productivity. Commission, being more specific, is typically a percentage of the sales value or a fixed amount per transaction, motivating the recipient to close more sales or meet certain targets.
Sawaira Riaz
Oct 03, 2023
Incentives can be short-term or long-term. For instance, a company might provide an incentive to teams for achieving a monthly target. Commissions, meanwhile, are usually recurrent and directly tied to individual transactions or the volume of sales within a certain timeframe.
Sawaira Riaz
Oct 03, 2023
While both incentives and commissions are used to spur desired behaviors, their structuring can differ. Incentives may be set up as competitions, tiered rewards, or bonuses. Commissions are often clear-cut, where individuals know exactly how much they will earn from a specific sale.
Harlon Moss
Oct 03, 2023

Comparison Chart

Nature

Broad motivational tool
Specific monetary reward for sales
Sawaira Riaz
Oct 03, 2023
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Application

Varied (can be for any role or objective)
Typically for sales roles
Sawaira Riaz
Oct 03, 2023

Form

Monetary or non-monetary
Usually monetary
Sawaira Riaz
Oct 03, 2023

Frequency

Can be one-time, periodic, or sporadic
Recurrent, per sale or transaction
Aimie Carlson
Oct 03, 2023

Purpose

Boost motivation, productivity, or behavior
Encourage sales and revenue generation
Sara Rehman
Oct 03, 2023

Incentive and Commission Definitions

Incentive

A motivation or encouragement
The bonus served as an incentive for employees to meet their targets.
Sawaira Riaz
Oct 03, 2023
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Commission

A fee paid to salespeople based on sales
She earned a 10% commission on every product sold.
Sawaira Riaz
Oct 03, 2023

Incentive

A thing that drives or urges to action
The prize was a great incentive for participants.
Harlon Moss
Oct 03, 2023

Commission

An amount or percentage received for a transaction
The agent takes a 5% commission for property deals.
Sawaira Riaz
Oct 03, 2023

Incentive

A reason for doing something
Eco-friendly products provide an incentive to protect the environment.
Harlon Moss
Oct 03, 2023

Commission

Earnings from sales or consignments
His monthly commission exceeded his basic salary.
Aimie Carlson
Oct 03, 2023

Incentive

A reward or benefit for a particular action
The company offers travel incentives to top performers.
Aimie Carlson
Oct 03, 2023

Commission

A directive or official task
The government set up a commission to investigate the issue.
Sara Rehman
Oct 03, 2023

Incentive

Something, such as the fear of punishment or the expectation of reward, that induces action or motivates effort.
Sawaira Riaz
Oct 16, 2022

Commission

The act of granting certain powers or the authority to carry out a particular task or duty.
Sawaira Riaz
Oct 16, 2022

Incentive

Serving to induce or motivate
An incentive bonus for high productivity.
Sawaira Riaz
Oct 16, 2022

Commission

The authority so granted.
Sawaira Riaz
Oct 16, 2022

Incentive

Something that motivates, rouses, or encourages.
I have no incentive to do housework right now.
Sawaira Riaz
Oct 16, 2022

Commission

The matter or task so authorized
Investigation of fraud was their commission.
Sawaira Riaz
Oct 16, 2022

Incentive

A bonus or reward, often monetary, to work harder.
Management offered the sales team a $500 incentive for each car sold.
Sawaira Riaz
Oct 16, 2022

Commission

A document conferring such authorization.
Sawaira Riaz
Oct 16, 2022

Incentive

Inciting; encouraging or moving; rousing to action; stimulating.
Sawaira Riaz
Oct 16, 2022

Commission

A public board or administrative body
The Federal Trade Commission investigates false advertising.
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Oct 16, 2022

Incentive

Serving to kindle or set on fire.
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Oct 16, 2022

Commission

Often Commission A ruling council within the Mafia that adjudicates family disputes and regulates family activities.
Sawaira Riaz
Oct 16, 2022

Incentive

Inciting; encouraging or moving; rousing to action; stimulative.
Competency is the most incentive to industry.
Sawaira Riaz
Oct 16, 2022

Commission

The act of committing or perpetrating
The commission of a crime.
Sawaira Riaz
Oct 16, 2022

Incentive

Serving to kindle or set on fire.
Part incentive reedProvide, pernicious with one touch of fire.
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Oct 16, 2022

Commission

A fee or percentage allowed to a sales representative or an agent for services rendered.
Sawaira Riaz
Oct 16, 2022

Incentive

That which moves or influences the mind, or operates on the passions; that which incites, or has a tendency to incite, to determination or action; that which prompts to good or ill; motive; spur; as, the love of money, and the desire of promotion, are two powerful incentives to action.
The greatest obstacles, the greatest terrors that come in their way, are so far from making them quit the work they had begun, that they rather prove incentives to them to go on in it.
Sawaira Riaz
Oct 16, 2022

Commission

An official document issued by a government, conferring on the recipient the rank of a commissioned officer in the armed forces.
Sawaira Riaz
Oct 16, 2022

Incentive

A positive motivational influence
Sawaira Riaz
Oct 16, 2022

Commission

The rank and powers so conferred.
Sawaira Riaz
Oct 16, 2022

Incentive

An additional payment (or other remuneration) to employees as a means of increasing output
Sawaira Riaz
Oct 16, 2022

Commission

To grant a military commission to.
Sawaira Riaz
Oct 16, 2022

Incentive

A stimulant to prompt action
The discount acted as an incentive for customers to buy more.
Sawaira Riaz
Oct 03, 2023

Commission

To grant authority for (something to be made or done); place an order for
Commission a new symphony for the festival.
Sawaira Riaz
Oct 16, 2022

Commission

To authorize or engage (someone to do something)
Commission an architect to design a building.
Sawaira Riaz
Oct 16, 2022

Commission

To put (a ship) into active service.
Sawaira Riaz
Oct 16, 2022

Commission

A sending or mission (to do or accomplish something).
Sawaira Riaz
Oct 16, 2022

Commission

An official charge or authority to do something, often used of military officers.
David received his commission after graduating from West Point.
Sawaira Riaz
Oct 16, 2022

Commission

The thing to be done as agent for another.
I have three commissions for the city.
Sawaira Riaz
Oct 16, 2022

Commission

A body or group of people, officially tasked with carrying out a particular function.
The European Commission
The Electoral Commission
The Federal Communications Commission
The company's sexual harassment commission made sure that every employee completed the on-line course.
Sawaira Riaz
Oct 16, 2022

Commission

A fee charged by an agent or broker for carrying out a transaction.
A reseller's commission
The real-estate broker charged a four percent commission for their knowledge on bidding for commercial properties; for their intellectual perspective on making a formal offer and the strategy to obtain a mutually satisfying deal with the seller in favour of the buyer.
Sawaira Riaz
Oct 16, 2022

Commission

The act of committing (e.g. a crime or error).
The commission, preparation or instigation of an act of terrorism
Sawaira Riaz
Oct 16, 2022

Commission

(transitive) To send or officially charge someone or some group to do something.
James Bond was commissioned with recovering the secret documents.
Sawaira Riaz
Oct 16, 2022

Commission

(transitive) To place an order for (often a piece of art).
He commissioned a replica of the Mona Lisa for his living room, but the painter gave up after six months.
Sawaira Riaz
Oct 16, 2022

Commission

To put into active service.
The aircraft carrier was commissioned in 1944, during WWII.
Sawaira Riaz
Oct 16, 2022

Commission

The act of committing, doing, or performing; the act of perpetrating.
Every commission of sin introduces into the soul a certain degree of hardness.
Sawaira Riaz
Oct 16, 2022

Commission

The act of intrusting; a charge; instructions as to how a trust shall be executed.
Sawaira Riaz
Oct 16, 2022

Commission

The duty or employment intrusted to any person or persons; a trust; a charge.
Sawaira Riaz
Oct 16, 2022

Commission

A formal written warrant or authority, granting certain powers or privileges and authorizing or commanding the performance of certain duties.
Let him see our commission.
Sawaira Riaz
Oct 16, 2022

Commission

A certificate conferring military or naval rank and authority; as, a colonel's commission.
Sawaira Riaz
Oct 16, 2022

Commission

A company of persons joined in the performance of some duty or the execution of some trust; as, the interstate commerce commission.
A commission was at once appointed to examine into the matter.
Sawaira Riaz
Oct 16, 2022

Commission

The acting under authority of, or on account of, another.
Sawaira Riaz
Oct 16, 2022

Commission

To give a commission to; to furnish with a commission; to empower or authorize; as, to commission persons to perform certain acts; to commission an officer.
Sawaira Riaz
Oct 16, 2022

Commission

To send out with a charge or commission.
A chosen bandHe first commissions to the Latian land.
Sawaira Riaz
Oct 16, 2022

Commission

A special group delegated to consider some matter;
A committee is a group that keeps minutes and loses hours
Sawaira Riaz
Oct 16, 2022

Commission

A fee for services rendered based on a percentage of an amount received or collected or agreed to be paid (as distinguished from a salary);
He works on commission
Sawaira Riaz
Oct 16, 2022

Commission

The act of granting authority to undertake certain functions
Sawaira Riaz
Oct 16, 2022

Commission

The state of being in good working order and ready for operation;
Put the ships into commission
The motor was out of commission
Sawaira Riaz
Oct 16, 2022

Commission

A group of representatives or delegates
Sawaira Riaz
Oct 16, 2022

Commission

A formal statement of a command or injunction to do something;
The judge's charge to the jury
Sawaira Riaz
Oct 16, 2022

Commission

An official document issued by a government and conferring on the recipient the rank of an officer in the armed forces
Sawaira Riaz
Oct 16, 2022

Commission

The act of committing a crime
Sawaira Riaz
Oct 16, 2022

Commission

A special assignment that is given to a person or group;
A confidential mission to London
His charge was deliver a message
Sawaira Riaz
Oct 16, 2022

Commission

Put into commission; equip for service; of ships
Sawaira Riaz
Oct 16, 2022

Commission

Place an order for
Sawaira Riaz
Oct 16, 2022

Commission

Charge with a task
Sawaira Riaz
Oct 16, 2022

Commission

The act of entrusting or assigning a task
The artist received a commission to paint a mural.
Sawaira Riaz
Oct 03, 2023

FAQs

Is commission a type of incentive?

Yes, it's a specific form of monetary incentive tied to sales.
Sawaira Riaz
Oct 03, 2023

Do all employees get incentives?

Not necessarily. It depends on the company's policies and individual roles.
Aimie Carlson
Oct 03, 2023

Are incentives always monetary?

No, incentives can be non-monetary, like extra vacation days or gifts.
Sawaira Riaz
Oct 03, 2023

Can a person receive both an incentive and a commission?

Yes, many salespeople might earn commissions plus additional incentives for surpassing targets.
Sawaira Riaz
Oct 03, 2023

Can a commission be a fixed amount?

Yes, it can be a fixed amount per sale or a percentage of the sale value.
Aimie Carlson
Oct 03, 2023

Do all companies offer incentives?

Not all. The provision of incentives depends on company policy, budget, and objectives.
Harlon Moss
Oct 03, 2023

Are commissions taxable?

Yes, in most jurisdictions, they are considered taxable income.
Janet White
Oct 03, 2023

What's the main objective of a commission?

To motivate salespeople to close more sales and generate revenue.
Harlon Moss
Oct 03, 2023

Is a commission guaranteed?

No, it's contingent upon sales made or conditions met.
Harlon Moss
Oct 03, 2023

How often are commissions paid?

It varies – could be weekly, monthly, or at other intervals, depending on the agreement.
Sawaira Riaz
Oct 03, 2023

Can incentives be negative or punitive?

Typically, incentives are positive, but there can be negative incentives or disincentives.
Harlon Moss
Oct 03, 2023

Is commission offered only in sales jobs?

Primarily, but some roles might have commission-like structures for task completion.
Janet White
Oct 03, 2023

Why do companies offer incentives?

To motivate employees, boost morale, and drive specific behaviors or outcomes.
Sawaira Riaz
Oct 03, 2023

Can incentives be team-based?

Absolutely, many companies offer team-based incentives to foster collaboration.
Harlon Moss
Oct 03, 2023

Can incentives be performance-based?

Yes, performance-based incentives are common to reward high achievers.
Aimie Carlson
Oct 03, 2023

Is commission only for individual sales?

Typically, but there can be group or team commissions in certain structures.
Sawaira Riaz
Oct 03, 2023

Can customers receive incentives?

Yes, companies might offer incentives to customers for loyalty, referrals, or purchases.
Aimie Carlson
Oct 03, 2023

Is commission always a percentage?

Not always. It can be a flat fee per sale or transaction.
Harlon Moss
Oct 03, 2023

How are incentives determined?

Companies might consider performance metrics, business goals, and budgetary constraints.
Aimie Carlson
Oct 03, 2023

Can the rate of commission change?

Yes, employers might adjust it based on role, market conditions, or strategy changes.
Sawaira Riaz
Oct 03, 2023
About Author
Written by
Sawaira Riaz
Sawaira is a dedicated content editor at difference.wiki, where she meticulously refines articles to ensure clarity and accuracy. With a keen eye for detail, she upholds the site's commitment to delivering insightful and precise content.
Edited by
Sumera Saeed
Sumera is an experienced content writer and editor with a niche in comparative analysis. At Diffeence Wiki, she crafts clear and unbiased comparisons to guide readers in making informed decisions. With a dedication to thorough research and quality, Sumera's work stands out in the digital realm. Off the clock, she enjoys reading and exploring diverse cultures.

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