Commission Calculator
Calculate your sales commission earnings with flat rates, tiered structures, or bonus thresholds. Enter your total sales and commission rate to see your earnings breakdown including base salary if applicable.
How to Use This Commission Calculator
1. Select your commission type - "Flat Rate" for a single percentage on all sales, or "Tiered Commission" for progressive rates at different sales levels.
2. Enter your total sales amount for the period you want to calculate.
3. For flat rate, enter your commission percentage. For tiered, customize the sales ranges and rates for each tier.
4. Optionally add a base salary if you receive fixed pay in addition to commission.
5. Set a bonus threshold and amount if you earn extra compensation for hitting sales targets.
6. Click "Calculate Commission" to see your total earnings with a detailed breakdown.
What is Sales Commission?
Sales commission is performance-based compensation paid to salespeople calculated as a percentage of the revenue they generate. This pay structure incentivizes strong performance by directly linking earnings to sales results, aligning employee motivation with company revenue goals.
Commission-based compensation is common in industries like real estate, automotive sales, insurance, retail, and business-to-business sales. Some positions are commission-only, while others offer a base salary plus commission for more stable income.
Types of Commission Structures
- Flat Rate Commission: A single percentage applied to all sales. For example, 10% on every sale regardless of volume. Simple to understand and calculate.
- Tiered Commission: Progressive rates that increase with sales volume. For example, 5% on the first $25,000, 8% on $25,001-$50,000, and 12% above $50,000. Rewards top performers.
- Residual Commission: Ongoing payments for recurring revenue, common in subscription services and insurance. Provides passive income for maintaining client relationships.
- Draw Against Commission: An advance on future commissions that must be repaid from earned commissions. Provides income stability during slow periods.
- Gross Margin Commission: Based on profit margin rather than revenue. Encourages salespeople to sell higher-margin products.
Commission vs Base Salary
Many sales positions offer a combination of base salary and commission. The split varies by industry and role:
- 100% Commission: High earning potential but no guaranteed income. Common in real estate and some insurance roles.
- 70/30 Split: 70% base salary, 30% commission potential. Offers stability with performance incentive.
- 50/50 Split: Equal parts base and commission. Balanced risk and reward.
- 30/70 Split: 30% base, 70% commission potential. High-performance environments with strong earning potential.
Understanding OTE (On-Target Earnings)
OTE represents the total expected compensation when sales targets are met. If a job offers $50,000 base salary with $50,000 OTE commission, your total OTE is $100,000 - but you only reach this if you hit your quota. Understanding OTE helps compare commission-based job offers accurately.
Commission Formulas
Flat Rate: Commission = Total Sales x Rate%
Tiered: Commission = Sum of (Sales in Each Tier x Tier Rate%)
Total Earnings: Base Salary + Commission + Bonus
Effective Rate: (Total Commission / Total Sales) x 100
Tips for Maximizing Commission Earnings
- Understand your structure: Know exactly how your commission is calculated to optimize your selling strategy
- Track your numbers: Monitor sales against tier thresholds and bonus targets throughout the period
- Time your deals: If approaching a higher tier, consider timing deals to maximize commission rates
- Focus on high-value sales: In flat-rate structures, larger deals mean larger commissions for similar effort
- Hit your bonuses: Bonus thresholds often provide significant additional income - know your targets