How to use the commission calculator
- Choose your plan: flat rate, tiered rates, or find the rate from a known payout.
- Enter your sales for the period and the rate or tiers from your compensation plan.
- Optionally add a base salary and any draw you have been paid in advance.
The formulas
Flat commission = Sales × Rate Tiered commission = Σ (Sales within each band × That band’s rate) Total pay = Base salary + Commission Commission due = Commission − Draw already paid Rate = Commission ÷ Sales × 100
Worked examples
- Base plus commission: $3,000 base and 5% on $50,000 of sales → $2,500 commission, $5,500 total.
- Tiered: 3% to $10,000, 5% to $50,000, 7% above; $60,000 of sales → $300 + $2,000 + $700 = $3,000 (an effective 5%).
- Draw: $1,500 draw, $20,000 sales at 5% = $1,000 earned → nothing more due and $500 of the draw not yet earned.
Common commission structures
| Plan | How it pays | Common in |
|---|---|---|
| Straight commission | Only a percentage of sales | Real estate, independent sales reps |
| Base + commission | Salary plus a percentage | Retail, B2B and software sales |
| Tiered commission | Higher rates on higher bands | Sales teams with quotas |
| Draw against commission | Advance deducted from earnings | Car sales, new sales hires |
| Gross margin commission | Percentage of profit, not revenue | Distributors, auto dealers |
| Residual commission | Ongoing share of repeat revenue | Insurance, subscriptions |
Typical commission rates
- Real estate: historically about 5–6% of the sale price in total, now increasingly negotiated, split between brokerages and agents.
- Car sales: often 20–30% of the dealer’s gross profit on the car, rather than the price.
- Software (SaaS) sales: around 8–12% of annual contract value is common.
- Retail: usually small, 1–5%, on top of an hourly wage.
- Insurance: high first-year rates with smaller renewal commissions.
Things to check in your pay plan
- Tiered vs “all sales at the top rate”: some plans pay the higher rate on all sales once a threshold is hit, not just the band above it. That can make a big difference — read the wording carefully.
- When commission is earned: at signing, at invoice, or when the customer pays. Returns and cancellations may be clawed back.
- Recoverable vs non-recoverable draws: a recoverable draw must be paid back from future commission; a non-recoverable one doesn’t.
- Caps and accelerators: some plans cap earnings, others raise rates above quota.
- Minimum wage and overtime: in the US, many commissioned employees are still covered by minimum wage and overtime rules unless an exemption applies.
Planning your income on commission
Commission income can swing a lot from month to month. Work out your average over the last six to twelve months, budget on the lower months rather than the best ones, and keep a larger emergency fund than a salaried worker would. If your employer withholds tax on commission at the flat 22% supplemental rate, you may owe more or get a refund at tax time depending on your total income.