Commission Calculator

How to use the commission calculator

Pick the kind of plan you are paid on:

• Flat rate — one percentage on all sales. Enter any two of sales, rate and commission to get the third, for example to check a pay statement or to see how much you need to sell to earn a target.
• Tiered — the rate rises as sales pass thresholds. Enter each tier’s upper limit and rate; the last tier has no limit. The result shows what each tier pays, your effective rate on all sales and the marginal rate on your next dollar of sales.
• Split — one commission shared between two sides of a deal and then between each agent and their brokerage, as in a home sale.

Add a base salary to see total pay for the period. To turn that pay into take-home money after withholding, use the paycheck calculator; to compare it with an annual or hourly salary, use the salary calculator.

Commission formulas

C

commission

S

sales the commission is paid on

r

commission rate as a decimal (5% = 0.05)

rᵢ

the rate of tier i

A tier covers sales above the previous tier’s limit up to and including its own. Under the whole-amount method the rate of the tier your sales end in is applied to all of them instead. Money is worked out in whole cents: each tier’s commission is rounded to the nearest cent before the tiers are added, and in a split each share is rounded and the remainder goes to the other party, so the parts always add up to the total.

The marginal rate is what the next dollar of sales earns — the rate of the tier your sales end in. The effective rate is the average across all your sales, which is lower under a graduated plan because the early sales were paid at the lower rates.

Worked examples

Flat rate. $25,000 of sales at 5% pays $25,000 × 0.05 = $1,250. With a $3,000 base salary for the month, total pay is $4,250. Working backwards, earning $1,250 at 5% takes $1,250 ÷ 0.05 = $25,000 of sales.

Tiered. An example plan pays 5% on sales up to $10,000 and 7% above that. On $25,000 of sales:

1. Tier 1: $10,000 × 5% = $500
2. Tier 2: ($25,000 − $10,000) × 7% = $15,000 × 7% = $1,050
3. Commission: $500 + $1,050 = $1,550, an effective rate of $1,550 ÷ $25,000 = 6.2% and a marginal rate of 7%

If the same plan paid the top rate on the whole amount, the commission would be $25,000 × 7% = $1,750.

Split. A $400,000 sale at an example rate of 5% carries $20,000 of commission. Split 50/50, each side receives $10,000; an agent who keeps 70% of their side is paid $7,000 and the brokerage keeps $3,000.

Reading a commission plan

• What counts as a sale. Plans may pay on revenue, on gross profit, or only once the customer has paid. If yours pays on profit, enter the profit as the sales amount — the margin calculator can work that out from cost and price.
• Graduated or whole amount. The two can pay very different amounts on the same sales. Check which one your plan uses; the result shows both.
• Period. Tier thresholds usually reset each month, quarter or year. Enter sales for the same period the thresholds refer to.
• Draws and chargebacks. An advance against commission (a draw) is subtracted from later commission, and returns or cancellations can be clawed back. This calculator does not model either.

Limits of this calculator

It works out the commission for one period from the numbers you enter. It does not know your employer’s plan rules, caps, accelerators tied to quota percentages, team splits beyond two sides, or taxes. The split defaults are only examples; commission rates are agreed between the parties and vary widely, so use the figures from your own agreement. For percentages in general, the percentage calculator covers every direction.