Calculate base with percent collections help

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I need some clarification regarding compensation. 
Hope this example makes it easy to understand my question. 
hypothetical:

base= 100k 

percent of net collections= 20%
total collections received/year= 500k

Which way do you calculate as I have seen both examples online:

a) 

500,000 - 100,000 x .20 + 100,000= total compensation 

b)
500,000 x .20 - 100,000 =any remaining above base is added to achieve total comp. 
 

I hope this makes sense! The order makes a big difference and I'd love to know what is standard. 
 

thanks! 

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Specializes in Psych/Mental Health.

So your total compensation is base salary and % of collection? 

If that's the case, it would be:

$100k + (0.2*$500k) = $100k + $100k = $200k

$500k total reimbursed is very high. How did you come up with that estimate?

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OK thanks, that is how I have been calculating it but I got an offer which demonstrated the other way, which seemed more like a strict percentage with the guarantee of the base, rather than the base PLUS percentage (if that makes sense).  I work in derm and net collections are high. Thanks again! 

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Specializes in Psychiatry.
mforte7 said:

OK thanks, that is how I have been calculating it but I got an offer which demonstrated the other way, which seemed more like a strict percentage with the guarantee of the base, rather than the base PLUS percentage (if that makes sense).  I work in derm and net collections are high. Thanks again! 

I think it depends on wording:

It's either "You make your collections up to 100K, then 20% above" which is the calculation of misusing the 100K first. Or it's You have base salary of 100K PLUS 20% of collections which would be 100K plus 20% of your 500K.

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Specializes in Various.

I think you should also see that it says net collections, not gross...if that makes sense....which might be the figure you've been given 

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