# What are average broker commission rates by industry?
No single average exists. Sourced rates run from 0.70% of a large merger to 60% of a first-year premium, and many industries publish no figure at all.
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There is no single average broker commission rate: the figures that can be read in a regulator's report, a statute, a trade association survey or an academic study run from a mean of 0.70% of the transaction value on large United States mergers to a legal ceiling of 60% of the first year's premium on Australian life insurance, and for many industries no reliable published average exists at all. The rate depends on what the percentage is applied to, on the size of the deal and on whether the number is a measured average, a legal cap or a customary formula.
This article gives only rates read in a named source, each with the year of the source, and says plainly where no such source was found. Rules belong to the country or state named next to them. It is general information, not legal advice, and none of the figures is a recommendation of what to charge.
0.62%typical upfront commission on an Australian home loan, paid by the lender, in a regulator's review of 2015 data
7%gross spread on 91% of United States IPOs raising $20–80 million in 1995–1998, in an academic study
3%maximum fee an agent may charge an NFL player under the players' union regulations
Sources: ASIC, review of mortgage broker remuneration (2017); Chen and Ritter, Journal of Finance (2000); NFLPA Regulations Governing Contract Advisors (as amended through 2012). Details in the sections below.
## Why is there no single average broker commission rate?
No single average broker commission rate exists because the published figures are three different kinds of number, measured on different bases.
The first kind is a measured average: someone collected what was actually paid on a set of deals and divided. A regulator with the power to demand data from lenders, a trade association surveying its members or a researcher working from public filings can produce one. These are rare, because commissions are private contract terms.
The second kind is a ceiling. A statute, a regulator or a union sets the most that may be charged, and the market settles at the cap or below it. A cap tells you the upper limit with certainty and tells you nothing about the average.
The third kind is a customary formula or a guideline: a scale that many agreements start from, or a figure a supervisor uses to decide when to ask questions. It is a reference point, not a measurement.
Then comes the base. A mortgage broker's percentage applies to a loan amount, an insurance broker's to a premium, an underwriter's to the money raised, a sports agent's to a salary, a freight broker's margin to the invoice sent to the shipper. A rate of 60% of one year's premium and a rate of 0.70% of a company's sale price describe different things, and neither is high or low until the base is named.
## Which commission rates can be read in an authoritative source?
Ten rates could be read in an authoritative source during the research for this article: four measured averages or estimates, one clustering study, four legal or regulatory ceilings and one supervisory guideline. The table gives each with its base, its source and the year.
| Industry and country | Rate read in the source | Applied to | Source and year |
| --- | --- | --- | --- |
| Home sales, United States | 5.1% estimated average for 2003 | Sale price | GAO report, 2005 |
| Mortgage broking, Australia | 0.62% upfront and 0.18% a year, typical | Loan amount | ASIC review, 2017 |
| Life insurance advice, Australia | Ceiling of 60% upfront, 20% ongoing | Policy cost for the year | ASIC instrument, 2017 |
| IPO underwriting, United States | 7% on 91% of mid-size deals | Gross proceeds | Chen and Ritter, 2000 |
| Securities mark-ups, United States | 5%, as a guide and not a rule | Prevailing market price | FINRA Rule 2121 |
| Mutual fund sales charges, United States | Ceiling of 8.5% | Offering price | FINRA Rule 2341 |
| Public-company mergers, United States | Mean of 0.70% | Transaction value | Saunders and Srinivasan, 2001 |
| Truckload freight, United States | Gross margin of 11.4% to 17.2% | Invoice to the shipper | TIA market report, 2019–2020 |
| NFL player agents | Ceiling of 3% | Player's compensation | NFLPA regulations, 2012 text |
| Theatrical agencies, New York | Ceiling of 10% per engagement | Performer's compensation | New York General Business Law |
Read the fourth column before the second. A figure from 2003 or from 1995–1998 describes the market of that period, and it is in the table because nothing more recent of the same quality was found, not because the rate is known to be unchanged. The sections that follow say what each source measured and what it left out.
## What do official sources say about real estate commission rates?
On home sales in the United States, the Government Accountability Office reported in 2005 that commission rates had persisted in a range of roughly 5% to 7% of the selling price, and cited an industry estimate that the average fell from 5.5% in 1998 to 5.1% in 2003. The same report made the point that matters most for anyone reading an average: the fee for selling a median-priced home rose while the rate fell, because prices rose faster than the rate declined.
An illustrative pair of numbers shows the mechanism. A home sold for $150,000 at 5.5% produces a fee of $8,250. A home sold for $200,000 at 5.1% produces $10,200. The rate dropped by 0.4 of a point and the fee grew by $1,950. A rate quoted without a price says little about what a broker earns.
The report predates the changes to how buyer-side compensation is agreed in the United States, and rates differ widely between countries. The blog's article on average real estate commission rates covers that ground.
## How much do mortgage and insurance brokers earn in commission?
Mortgage and insurance brokers are paid a percentage of the loan or of the premium, usually by the lender or the insurer, and usually in two parts: an upfront commission and a smaller one that continues each year. Australia is the country where both were read in a regulator's own publication.
On mortgages, the Australian Securities and Investments Commission published in 2017 a review of mortgage broker remuneration built on data it collected from lenders and aggregators for 2015. It gave a typical upfront commission of 0.62% of the loan and a typical trail commission of 0.18% a year, paid by the lender to the aggregator, the intermediary company that brokers work through. On the review's own example of a $500,000 loan (in Australian dollars), 0.62% is $3,100 upfront and 0.18% is about $900 in the first year, an amount that declines as the loan is repaid.
The same review shows why even a well-measured rate needs a second question: who is the figure paid to? After the aggregator's share, the broker business received on average 0.54% upfront and 0.14% in trail. On the $500,000 loan that is $2,700 and $700, so $400 of the upfront payment and $200 of the first year's trail stay with the aggregator. The review also found it common for commission to be calculated on the total amount of borrowing approved rather than the amount actually drawn, a third thing a headline rate does not tell you.
On life insurance, the figure is a ceiling and not an average. An instrument made by the same regulator in 2017 limits the commission on life risk insurance sold with advice to 60% of the policy cost in the year the policy is issued, for policies issued from 1 January 2020, and to 20% of the policy cost in each later year. It also sets a clawback: 100% of the first-year commission is repaid if the policy is cancelled or not continued in its first year, and 60% if that happens in the second year.
A worked example, with an illustrative annual premium of $3,000 that stays flat, shows how a rate that sounds very high spreads out over time.
What a 60% and 20% ceiling pays on one policyWorked example: illustrative annual premium of $3,000, unchanged for five years, commission at the ceiling
First year60% of $3,000 is $1,800 of upfront commission.
Years two to five20% of $3,000 is $600 a year, or $2,400 over four years.
Five-year total$1,800 plus $2,400 is $4,200, on $15,000 of premiums paid: 28% of the premiums, not 60%.
If the policy lapses in year two60% of the first-year commission is repaid: $1,080 of the $1,800 goes back.
The ceilings and clawback percentages are those of the ASIC instrument; the premium is illustrative and the example assumes commission at the maximum.
For general insurance and for other countries, no figure is given here. Insurers report commission expense in their regulatory filings, and in the United States the federal Medicare agency sets agent compensation ceilings for the plans it oversees as dollar amounts per enrolment, revised each year, not as percentages.
## What do securities brokers and underwriters charge?
In United States securities markets, the sourced figures are a supervisory guide of 5% on mark-ups, a ceiling of 8.5% on mutual fund sales charges and a studied spread of 7% on mid-size initial public offerings. Each is a different kind of number.
The 5% figure comes from FINRA, the self-regulatory body for broker-dealers. Its Rule 2121 on fair prices and commissions carries a "5% Policy", and the rule's own text says the policy "is a guide, not a rule" and that a mark-up pattern of 5% or even less may be considered unfair or unreasonable. The rule lists the circumstances to weigh, including the type of security, its price and the amount of money involved, and it states that a transaction involving a small amount of money may warrant a higher percentage to cover the expenses of handling. Where the firm acts as agent, the commission must be fair in light of all relevant circumstances. The 5% is a threshold for scrutiny, written with deal size in mind, not an average commission.
The 8.5% figure is a true ceiling. FINRA Rule 2341 provides that the front-end and deferred sales charges on a fund's shares, where the fund has no asset-based sales charge, shall not exceed 8.5% of the offering price, with lower limits when the fund does not offer the quantity discounts the rule describes or pays a service fee.
The 7% figure is the best documented of the three. In "The Seven Percent Solution", published in the Journal of Finance in 2000, Hsuan-Chi Chen and Jay Ritter found that 91% of United States initial public offerings raising between $20 million and $80 million in 1995–1998 paid a gross spread of exactly 7%, against about 26% of such deals in 1985–1987. On an offering of $50 million, 7% is $3.5 million. For offerings above $80 million the study found average spreads below 7% and little clustering, and for those under $20 million spreads were frequently higher than 7%.
The study also contains a lesson about averages. For 1998 it reports an average spread across all offerings of 6.74% when every deal counts equally and 5.52% when each deal is weighted by the money raised. The gap of 1.22 points exists because a few very large offerings paid about 4%, and they dominate the second average while barely moving the first.
## What do M&A advisors and business brokers charge?
On mergers and business sales, the only measured average found was for large public-company deals, a mean of 0.70% of transaction value, and no authoritative published average was found for business brokers selling small private companies. For those, the rate is whatever the engagement agreement says, most often built on a sliding scale.
The 0.70% figure comes from a working paper by Anthony Saunders of New York University and Anand Srinivasan, dated 2001, on 611 mergers of United States listed companies announced and completed between 1985 and 1998. The paper reports a strong negative correlation between the percentage fee and the size of the transaction, and its sub-averages move accordingly: 0.82% for the least prestigious tier of advisors against 0.65% for the top tier, and 0.79% for companies that rarely did deals against 0.54% for frequent acquirers. The top-tier banks were not cheaper; they advised on larger transactions, where the percentage is lower. On a $500 million merger, 0.70% is $3.5 million.
For private-company sales, the reference most often named is the Lehman formula. A United States federal appeals court set it out in a 1986 decision on a finder's fee claim: 5% of the first million dollars of the price, 4% of the second, 3% of the third, 2% of the fourth and 1% of the balance. The court described the scale; it did not say how widely it is used, and no survey read for this article measures that. Variants with higher percentages or wider tiers are common in engagement letters, and they are negotiated deal by deal.
The trade association of business brokers in the United States publishes a quarterly market survey with a university partner. The editions read for this article report sale prices, valuation multiples and time to close by deal size, and no commission rates. Percentages for small-business sales circulate widely on brokers' own pages, but a figure repeated from page to page without a survey behind it is not a measured average, so none is given here.
## Is a freight broker's margin the same thing as a commission?
A freight broker's pay is a margin, not a commission: the broker invoices the shipper one amount, pays the carrier another and keeps the difference. The figure to compare with other industries is therefore the gross margin as a share of the shipper's invoice.
The Transportation Intermediaries Association, the trade association of freight brokers in the United States, collects it from members for its quarterly market report. As relayed by the trade press at the time, the report put the gross margin on brokered truckload freight at 17.2% in the first quarter of 2019 and at 11.4% in the fourth quarter of 2020 the highest and lowest of the eight quarters of 2019 and 2020. With the average invoice per load reported for those quarters, $1,777 and $1,997, that is about $306 and about $228 kept per load.
Two things follow. A freight margin moves by a third in under two years with the balance between trucks and loads, so a single "average" is a snapshot of one quarter. And in the fourth quarter of 2020 the same report showed 11.0% for the largest brokerages and 17.3% for the smallest: the firms moving the most freight worked on the thinnest margin. Gross margin is also measured before the brokerage pays its own staff, and the individual broker's commission is a share of that margin set by the employer's pay plan, for which no published average was found.
## Which commission rates are capped by law or by a union?
Agents who represent performers and athletes work under some of the clearest ceilings, because a statute or a players' union fixes the maximum. A ceiling is the easiest rate to verify and the least informative about what is typically charged.
The National Football League Players Association regulates the agents who negotiate player contracts. Its Regulations Governing Contract Advisors, in the text amended through 2012 that was read for this article, set the maximum fee at 3% of the compensation the player receives in each season covered by the contract. On $1,000,000 of season compensation, the ceiling is $30,000. The same text lowers the ceiling to 2% for a player who signs a one-year tender under a franchise or transition designation or as a restricted free agent, to 1.5% the second time the player is designated and to 1% the third. Agents may agree a lower fee, so 3% is the top of the range and not its middle.
In New York, the General Business Law caps the fee of a theatrical employment agency at 10% of the performer's compensation for an engagement, and at 20% for orchestra, opera and concert engagements. The same section sets quite different ceilings for other classes of placement, some as a share of the first month's pay: within one statute, the rate changes with the kind of work. Other states and countries have their own rules.
## Which industries have no reliable published average?
For yacht, aircraft, ship, commodity, art, domain name and commercial real estate brokerage, no regulator's report, statute, trade association survey or academic study giving an average commission rate was found during the research for this article. Figures for these markets are easy to find and hard to trace: they are repeated as custom, usually without a source, a year or a sample.
That does not mean the rate is arbitrary. In each of these markets the commission is a term of a private contract (a listing agreement, a central agency agreement, a charter party, a brokerage mandate), and it is set by a handful of things you can identify:
- The custom of the market, meaning the percentage that standard-form contracts and other brokers in the same niche start from.
- The size of the transaction, since percentages are negotiated down as values rise.
- Who pays, and whether the commission is shared with a broker on the other side.
- The work involved: exclusivity, marketing spend carried by the broker, the length of the sale.
- Any minimum fee or retainer that applies whatever the price.
If you work in one of these fields, the reliable benchmark is not a number on a web page. It is the standard form of contract your trade body publishes, the terms of recent agreements you or your colleagues have signed, and what the principal's lawyer will accept.
## How does deal size change the effective rate?
On a sliding scale, the effective rate falls as the deal grows, so one average covering small and large deals describes neither. The worked example below applies the 5-4-3-2-1 scale, as the federal appeals court set it out, to seven illustrative sale prices.
Effective rate under a 5-4-3-2-1 sliding scaleFee as a percentage of the sale price, for seven illustrative prices from $500,000 to $50 million
Worked example. Scale: 5% of the first million dollars, 4% of the second, 3% of the third, 2% of the fourth, 1% of the balance. No minimum fee, retainer or expenses included.
Take the $5 million sale: $50,000 on the first million, $40,000 on the second, $30,000 on the third, $20,000 on the fourth and $10,000 on the fifth, $150,000 in all. The fee is six times the fee on a $500,000 sale, and the rate is three fifths of it.
Now ask what the "average rate" of these seven deals is. Add the seven percentages and divide by seven, and the answer is 3.16%. Add the seven fees, $1,465,000, and divide by the combined sale prices, $93.5 million, and the answer is 1.57%. The first figure is twice the second, and both are honest. The first describes the typical deal, the second the typical dollar. A published average rarely says which of the two it is, and that is the same gap the IPO study showed between 6.74% and 5.52%.
A minimum fee bends the picture at the other end. Suppose the same engagement carries an illustrative minimum fee of $75,000. On the $500,000 sale the scale gives $25,000, so the minimum applies and the effective rate is 15%. On the $1 million sale the minimum still applies, and the rate is 7.5%. The scale only overtakes the minimum above a price of $1,625,000. A small deal under a minimum fee pays a rate that no "average by industry" table would show, and the broker is not overcharging: a sale takes a certain amount of work whatever its price.
## How should you benchmark your own commission rate?
Benchmark your own commission rate against deals of the same size, on the same base and in the same jurisdiction, and read a published figure only once you know how it was produced. A short sequence of checks does the job.
Five checks before relying on a commission benchmark
Name the baseWrite down what your percentage applies to: sale price, loan amount, annual premium, proceeds raised, salary or invoice. Compare only with figures on the same base.
Look for a rule firstCheck whether a statute, a regulator, a licensing body or a union caps or shapes the fee in your field and in your state or country. A ceiling settles the upper limit before any negotiation.
Find the measurement, if there is oneLook for a regulator's review, a trade association survey or an academic study, and note its year, its sample and whether its average weights deals equally or by value.
Match the deal sizeCompare your rate with deals of your size. On a sliding scale, a rate that is normal at $1 million is far above the scale at $25 million.
Count everything that is paidAdd minimum fees, retainers, trail or renewal commission and any clawback, and work out the effective rate on the whole engagement, as in the worked examples above.
When the commission is shared, with a co-broker, a referrer or an aggregator, do the same exercise on your own share. The mortgage figures showed the difference between what a lender pays and what the broker business receives, and the same gap exists wherever a fee passes through more than one hand. The percentage worth benchmarking is the one that reaches you, on the deals you actually do.