Commission Calculator
Calculate sales commission at a flat rate or with a higher rate above a threshold.
About the Commission Calculator
Enter total sales, the rate on the first tier, where that tier ends and the rate above it, plus any base pay. The calculator shows the commission on each tier, the effective rate overall and total pay. For a single flat rate, set the first tier very high.
Tiered (graduated) commission pays one rate up to a sales threshold and a higher rate on sales above it, rewarding top performers. Only the sales within each tier earn that tier's rate, like tax bands.
The formula
Commission = rate₁ × min(sales, tier) + rate₂ × (sales − tier)
Worked example
80,000 of sales: 5% up to 50,000, 8% above
- First tier: 50,000 × 5% = 2,500
- Above it: 30,000 × 8% = 2,400
- Commission 4,900, an effective 6.13% of sales
Things to keep in mind
- Two tiers only. For more, work out each band separately and add them.
- Before tax, and before any clawback for returned or cancelled sales.
Questions people ask
Is commission taxed differently?
It's ordinary income; in the US it's often withheld at the 22% supplemental rate.
What's a draw?
An advance against future commission.
Does the higher rate apply to all sales once I pass the tier?
Not in a graduated plan like this one. Some plans do pay the higher rate on everything (a retroactive plan); check your contract.