Commission Calculator

How to Use This Commission Calculator

Understanding your commission structure is critical for forecasting income and setting sales targets. This calculator handles both flat-rate and tiered (graduated) commission plans, showing you exactly how much you earn at any sales level.

Enter your total sales. Input the total revenue you generated during the period.
Choose flat or tiered. Flat rate applies one percentage to all sales. Tiered applies increasing rates at higher sales brackets (like tax brackets).
Set your rates. For tiered plans, add tiers with their ceiling amounts and corresponding rates.
Add base salary (optional). If you have a base salary plus commission, enter it to see total compensation.

Commission Formulas

Flat: Commission = Sales × Rate%
Tiered: Commission = Σ (Sales in Tier × Tier Rate%)

How Tiered Commission Works

Tiered commission is like tax brackets. If your tiers are 5% on the first $50K and 8% on $50K-$100K, then $75K in sales earns: ($50,000 × 5%) + ($25,000 × 8%) = $2,500 + $2,000 = $4,500. The effective rate is 6%, even though no single tier is 6%.

Sample Calculations

Total Sales	Structure	Commission
$50,000	Flat 5%	$2,500
$100,000	Flat 8%	$8,000
$75,000	Tiered (5%/8%/10%)	$5,250
$200,000	Tiered (3%/5%/8%)	$12,500

Common Commission Mistakes

Confusing tiered with flat. A "10% commission" applied as a flat rate earns more on all sales. A tiered plan with 10% at the top tier only applies that rate to sales above a threshold.
Not calculating effective rate. Your effective commission rate matters more than any single tier. Compare effective rates across different sales volumes to understand your true earning curve.
Ignoring clawbacks. Some plans claw back commission on cancelled deals or returned products. Factor this risk into your income projections.
Forgetting about caps. Some commission plans have annual caps. Once you hit the cap, additional sales earn zero commission.

Worked Example: Tiered SaaS Commission

A SaaS sales rep has this tiered plan with $120,000 in quarterly sales:

Tier 1: 5% on first $50,000
Tier 2: 8% on $50,001 to $100,000
Tier 3: 12% on sales above $100,000

Step 1: Tier 1: $50,000 × 5% = $2,500

Step 2: Tier 2: $50,000 × 8% = $4,000

Step 3: Tier 3: $20,000 × 12% = $2,400

Total commission: $2,500 + $4,000 + $2,400 = $8,900

Effective rate: $8,900 ÷ $120,000 = 7.4%

Frequently Asked Questions

How do I calculate my sales commission?

For flat-rate commission, multiply your total sales by the commission rate. For tiered commission, apply each rate only to the sales within that tier. For example, with tiers of 5% on the first $50K and 8% on sales above $50K, $75K in sales earns $2,500 + $2,000 = $4,500.

What is a tiered commission structure?

A tiered (or graduated) commission structure pays different rates at different sales levels. Lower tiers have lower rates, and higher tiers pay higher percentages. This incentivizes salespeople to exceed targets. Each tier's rate applies only to the sales within that bracket, similar to how tax brackets work.

What is a typical sales commission rate?

Commission rates vary widely by industry. SaaS sales: 8-12%. Real estate: 5-6% (split with brokerage). Insurance: 5-15%. Retail: 1-5%. Financial services: 1-3%. Advertising: 10-20%. The rate often depends on base salary—lower base = higher commission.

What is the difference between commission and bonus?

Commission is earned directly as a percentage of sales revenue. Bonuses are typically flat amounts awarded for meeting specific goals (quarterly targets, annual performance). Commission scales with sales volume; bonuses are usually capped. Most sales roles combine both.

How are commission taxes calculated?

Commission is taxed as supplemental income. Employers often withhold at a flat 22% federal rate (37% for amounts over $1 million). State taxes apply additionally. At year-end, commission is combined with regular income and taxed at your effective rate. You may owe more or get a refund based on total income.

What is a draw against commission?

A draw is an advance on future commission, acting as a guaranteed minimum payment. If your commission exceeds the draw, you keep the excess. If it falls short, you may owe the difference (recoverable draw) or the company absorbs the loss (non-recoverable draw).