Good question, simple answer. Of course, you might well think that is stupid in that if the principal pays 100% of the sale price as a commission, he is taking a loss each time a sale is made. In the short term, that is true – to a certain extent. But, cock-eyed as it may seem, the business owner is willing to lose on that (the first) sale to any new customer/client in the belief that he will recoup his loss (and more) on subsequent sales.
Commissions of 100% are more suited to, and more often found in the world of digital products where, in a nutshell, the vendor is paying to obtain the purchaser’s email address. That address usually will be verified as a ‘live’ address before delivery of the purchased product and future offers will be sent to that address. Bear in mind also that production costs of digital products are virtually NIL after the first one. So it is more a matter of forgoing profit than building losses.