Calculate sales commission from a flat rate or a two-tier plan, and see total earnings when commission is added to a base salary.
How commission is calculated
Flat commission = sales × rate
Tiered commission = (sales up to threshold × tier 1 rate) + (sales above threshold × tier 2 rate)
Worked examples
- Flat: $85,000 in sales at 5% earns $4,250.
- Tiered: 3% on the first $50,000 ($1,500) plus 6% on the remaining $35,000 ($2,100) earns $3,600, an effective rate of 4.24%.
Common commission structures
- Straight commission: pay comes entirely from commission.
- Base plus commission: a fixed salary with commission on top, the most common setup.
- Tiered commission: higher rates after targets are met, which rewards top performers.
- Draw against commission: an advance paid back from future commission.
Frequently asked questions
Is commission calculated on revenue or profit?
Either. Many plans pay on revenue, but some pay on gross profit to encourage sales at healthy margins. Check your plan.
How is commission taxed?
Commission is taxable income. In the U.S., it is often treated as supplemental wages for withholding purposes.
Related tools
Results are estimates for planning and education. They are not accounting, tax or legal advice. Check important figures with a qualified accountant.