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Dan

on Jan 10, 2021

Global

How to design a commission table?

Hello.

I'm thinking about a business problem. Could you please help a bit?

Say we are a curated well-established B2C marketplace. What are the key factors that would define our commission collected from partners' orders on the marketplace?

I would think about rewarding (with lower commission) the partners with:

larger gross merchandise volume
more extensive product range
larger geography of sales (in terms of countries)
partners who use our additional services to promote their products on our marketplace

Cheers!

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Top answer

Ian

Coach

on Jan 11, 2021

Top US BCG / MBB Coach - 5,000 sessions |Tech, Platinion, Big 4 | 9/9 personal interviews passed | 95% candidate success

Hi Dan,

Fundamentally, you have to say:

a) What matters (to our business)

b) What commission strructures change behavior to impact what matters

We need to determine the above before going any further! Then, the scale needs to also incentivize and "stretch" sales

Vlad

Coach

on Jan 10, 2021

McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Hi,

The most common issue with the marketplace is the lack of supply.

Thus, you should incentivize the supply to accept certain orders by lowering commissions / increasing pricing for customers

Best

Clara

Coach

on Jan 12, 2021

McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

On top of what has been shared beofre, I would advise you to look at retail and ecommerce cases. If you don´t have any, feel free to PM and I will share with you

Hope it helps!

Cheers,

Clara