How to use the sales commission calculator
- Choose the plan type: flat percentage, tiered, or base pay plus commission.
- Enter sales for the period and the commission rate, or edit the tier table with upper limits and rates.
- For base plus commission, enter base pay and an optional quota above which commission is paid.
- Read the commission, total pay and effective rate, and check the tier breakdown.
Worked example
$40,000 in sales with tiers of 5% to $10,000, 7.5% to $25,000 and 10% above
The first $10,000 earns $500, the next $15,000 earns $1,125 and the last $15,000 earns $1,500, for a total commission of $3,125. The effective rate is 7.81% of sales.
How it works
Tiers are marginal: each rate applies only to the portion of sales inside its band, like tax brackets. Commission = Σ (sales in band × band rate). Flat commission = sales × rate. Base plus commission = base pay + (sales − quota, if positive) × rate, or base pay + tiered commission.
Assumptions
- Tiers are marginal (graduated), not retroactive. In a retroactive plan the top rate applies to all sales; check your plan.
- Commission is paid on the sales figure you enter, whether revenue or gross profit.
Frequently asked questions
What is the difference between marginal and retroactive tiers?
With marginal tiers, higher rates apply only to sales above each threshold. With retroactive tiers, reaching a threshold pays the higher rate on all sales. This calculator uses marginal tiers.
What does the effective rate mean?
Total commission divided by total sales. It shows the blended rate across all tiers.
Can I model a quota?
Yes. In base plus commission mode with a flat rate, enter the quota and commission is paid only on sales above it.
Limitations
- Does not model accelerators, caps, clawbacks, draws or split deals.