Brokerage vs. Commission — What's the Difference?
Edited by Tayyaba Rehman — By Urooj Arif — Updated on April 24, 2024
Brokerage refers to the service of facilitating financial transactions, often charging a fee, while commission is a payment made to an agent for services rendered, typically a percentage of the sale price.
Difference Between Brokerage and Commission
Table of Contents
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Key Differences
Brokerage involves the business of buying and selling assets on behalf of clients, primarily in financial markets such as stocks, bonds, or real estate. On the other hand, commission is a form of compensation paid to an agent or broker based on the completion of a transaction, often calculated as a percentage of the transaction value.
A brokerage firm provides services that include market research, investment advice, and transaction execution. Whereas, a commission is earned by individuals or firms once a specific action, like a sale or transaction, is successfully completed.
Brokerages may charge a flat fee or a scaled fee based on the transaction's complexity or value. Conversely, commissions motivate agents to increase the transaction volume or value, as their earnings are directly tied to these factors.
The role of a brokerage is to act as an intermediary, ensuring legal and regulatory compliance in transactions. In contrast, commission structures are designed to incentivize sales and performance, particularly in sales-driven industries like real estate and insurance.
Brokerages often provide a broader range of services beyond transaction facilitation, including portfolio management and financial planning. Commissions, however, are straightforward with their purpose to remunerate a direct action or performance milestone.
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Comparison Chart
Definition
Service facilitating financial transactions for clients.
Payment to an agent based on transaction success.
Fee Structure
May charge flat or scaled fees.
Typically a percentage of the sale price.
Primary Function
Facilitates buying and selling, provides advice.
Incentivizes and remunerates sales performance.
Industry Application
Finance, real estate, investment.
Sales, real estate, insurance.
Dependence on Volume
Less directly dependent on transaction volume.
Earnings highly dependent on transaction volume.
Compare with Definitions
Brokerage
A firm that facilitates the buying and selling of financial securities.
The brokerage handled all aspects of the stock transaction.
Commission
A fee paid to an agent as a percentage of the sales they facilitate.
He earned a 5% commission on each car sold.
Brokerage
The fee charged by a broker for executing transactions.
The brokerage on the sale was calculated at 1% of the transaction value.
Commission
An instruction, command, or duty given to a person or group.
She was given the commission to redesign the website.
Brokerage
An establishment offering investment services to clients.
She consulted her brokerage before making any large investments.
Commission
A group of people officially charged with a particular function.
The commission will investigate allegations of unfair practices.
Brokerage
A broker's office or business.
He works in a brokerage that specializes in commercial real estate.
Commission
The act of committing or performing an action.
The commission of the play was a success.
Brokerage
The service of a broker in bringing parties together and assisting in negotiations.
The brokerage successfully facilitated the merger between the two companies.
Commission
Earning through sales or service tasks.
Her main income is derived from commission.
Brokerage
A firm that acts as a broker, especially in the buying and selling of stocks or other securities.
Commission
An instruction, command, or role given to a person or group
One of his first commissions was to redesign the Great Exhibition building
He received a commission to act as an informer
Brokerage
The business of a broker.
Commission
A group of people entrusted by a government or other official body with authority to do something
A commission was appointed to investigate allegations of police violence
Brokerage
A fee or commission paid to a broker.
Commission
A sum, typically a set percentage of the value involved, paid to an agent in a commercial transaction
He sold cosmetics on commission
Foreign banks may charge a commission
Brokerage
A business, firm, or company whose business is to act as a broker (e.g., stockbroker).
Commission
A warrant conferring the rank of officer in an army, navy, or air force
He has resigned his commission
She intended to apply for a commission in the army
Brokerage
The occupation of being a broker.
Commission
The action of committing a crime or offence
The commission of an arrestable offence
The errors are of omission rather than commission
Brokerage
The commission paid to a broker.
Commission
Order or authorize the production of (something)
The portrait was commissioned by his widow in 1792
Brokerage
The business or employment of a broker.
Commission
Bring (something newly produced) into working condition
The aircraft carrier was commissioned in 1945
We had a few hiccups getting the heating equipment commissioned
Brokerage
The fee, reward, or commission, given or changed for transacting business as a broker.
Commission
Appoint (someone) to the rank of officer in an army, navy, or air force
He was commissioned into the Royal Fusiliers
Brokerage
A stock broker's business; charges a fee to act as intermediary between buyer and seller
Commission
The act of granting certain powers or the authority to carry out a particular task or duty.
Brokerage
The business of a broker; charges a fee to arrange a contract between two parties
Commission
The authority so granted.
Brokerage
Place where a broker conducts his business
Commission
The matter or task so authorized
Investigation of fraud was their commission.
Commission
A document conferring such authorization.
Commission
A public board or administrative body
The Federal Trade Commission investigates false advertising.
Commission
Often Commission A ruling council within the Mafia that adjudicates family disputes and regulates family activities.
Commission
The act of committing or perpetrating
The commission of a crime.
Commission
A fee or percentage allowed to a sales representative or an agent for services rendered.
Commission
An official document issued by a government, conferring on the recipient the rank of a commissioned officer in the armed forces.
Commission
The rank and powers so conferred.
Commission
To grant a military commission to.
Commission
To grant authority for (something to be made or done); place an order for
Commission a new symphony for the festival.
Commission
To authorize or engage (someone to do something)
Commission an architect to design a building.
Commission
To put (a ship) into active service.
Commission
A sending or mission (to do or accomplish something).
Commission
An official charge or authority to do something, often used of military officers.
David received his commission after graduating from West Point.
Commission
The thing to be done as agent for another.
I have three commissions for the city.
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.
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.
Commission
The act of committing (e.g. a crime or error).
The commission, preparation or instigation of an act of terrorism
Commission
(transitive) To send or officially charge someone or some group to do something.
James Bond was commissioned with recovering the secret documents.
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.
Commission
To put into active service.
The aircraft carrier was commissioned in 1944, during WWII.
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.
Commission
The act of intrusting; a charge; instructions as to how a trust shall be executed.
Commission
The duty or employment intrusted to any person or persons; a trust; a charge.
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.
Commission
A certificate conferring military or naval rank and authority; as, a colonel's commission.
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.
Commission
The acting under authority of, or on account of, another.
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.
Commission
To send out with a charge or commission.
A chosen bandHe first commissions to the Latian land.
Commission
A special group delegated to consider some matter;
A committee is a group that keeps minutes and loses hours
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
Commission
The act of granting authority to undertake certain functions
Commission
The state of being in good working order and ready for operation;
Put the ships into commission
The motor was out of commission
Commission
A group of representatives or delegates
Commission
A formal statement of a command or injunction to do something;
The judge's charge to the jury
Commission
An official document issued by a government and conferring on the recipient the rank of an officer in the armed forces
Commission
The act of committing a crime
Commission
A special assignment that is given to a person or group;
A confidential mission to London
His charge was deliver a message
Commission
Put into commission; equip for service; of ships
Commission
Place an order for
Commission
Charge with a task
Common Curiosities
What is a commission?
Commission is a fee paid to an agent or broker for their services, typically a percentage of the transaction value they facilitate.
How do brokerage fees differ from commissions?
Brokerage fees can be flat or scaled based on transaction value or complexity, whereas commissions are usually strictly percentage-based.
What is a brokerage?
Brokerage is a firm or service that facilitates financial transactions, such as buying and selling securities, for clients.
Can a brokerage earn commissions?
Yes, brokerages can earn commissions by acting as agents in transactions, earning a percentage of the deal value.
Do all brokerages charge a brokerage fee?
Most do, but the structure of these fees can vary significantly from one brokerage to another.
Is commission payment dependent on transaction volume?
Yes, commission payments are typically highly dependent on the volume and value of transactions completed.
How do commission rates vary between industries?
Commission rates can vary widely, with industries like real estate typically seeing higher rates compared to others like small retail sales.
How do brokerages support their clients?
Brokerages support their clients by providing market insights, investment advice, and ensuring regulatory compliance.
Can commission structures be negotiated?
Yes, commission structures can often be negotiated, especially in fields like real estate and high-value sales.
What types of industries use commission-based structures?
Industries such as real estate, insurance, and sales often use commission-based compensation structures to incentivize performance.
What is the benefit of a commission-based payment model?
The commission-based model incentivizes agents to maximize their efforts and sales output, aligning their goals with those of their clients or employers.
What services might a brokerage provide beyond transaction facilitation?
Many brokerages offer additional services like investment advice, portfolio management, and financial planning.
What motivates a broker to earn commissions?
Commissions motivate brokers by directly linking their compensation to their performance and the value of the transactions they facilitate.
Are commissions only paid upon successful transactions?
Yes, commissions are typically only paid when a transaction is successfully completed.
How do brokerages and commissions impact consumer costs?
Both brokerages and commission structures can add to the overall cost of services, reflecting in the pricing of goods, services, or assets transacted.
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Written by
Urooj ArifUrooj is a skilled content writer at Ask Difference, known for her exceptional ability to simplify complex topics into engaging and informative content. With a passion for research and a flair for clear, concise writing, she consistently delivers articles that resonate with our diverse audience.
Edited by
Tayyaba RehmanTayyaba Rehman is a distinguished writer, currently serving as a primary contributor to askdifference.com. As a researcher in semantics and etymology, Tayyaba's passion for the complexity of languages and their distinctions has found a perfect home on the platform. Tayyaba delves into the intricacies of language, distinguishing between commonly confused words and phrases, thereby providing clarity for readers worldwide.
