Commission Net Down Calculations Request

[bamaguy]

Hi All,

I am trying to figure out a formula so I can create a calculator for use in my business. I am trying to figure out the calculations needed to net down the commission and find the correct commission & premium amount. Example below:

I am the insurer.

I have quoted a piece of business to my broker for 100K Premium and providing 15% commission. I am due the net 85,000 and the broker keeps the 15,000 from the insured. Now the broker comes back and insists that the deal will not get closed unless it is at 90,000 or less. Can you help me create a set of formulas to calculate this based on inputting the PREMIUM amount and COMMISSION due to the broker?

 

[Eric W]

I'm not quite sure what you're looking for. If the net and commission are calculated from the percentage, then the net would just be:

=90000*(1-.15)
or 76,500

and the commission is just:

=90000*.15
or 13,500.

But there could be other scenarios, like you could say that you can't perform your business for under 85,000, so if he wants the business he'll have to accept a 5,000 commission, and the rate could be calculated as 5000/90000, or 5.55%.

Let us know if you have a different scenario.