Commission plans range from a simple percentage of sales to multi-tier schedules with base pay and draws. The math is never hard, but it’s easy to misread a plan — especially tiered plans, where “7% over $100,000” can mean very different paychecks depending on whether the rate applies to the slice above the threshold or to everything. This calculator handles both, plus base pay, draws and a target-income reverse calculation.
How to use the commission calculator
- Enter the sales amount for the pay period.
- Choose a commission plan: a flat rate, marginal tiers, or retroactive tiers.
- For a flat plan, enter the commission rate. For tiers, list one tier per line as the sales amount where it starts and its rate — for example
50000 5means 5% from $50,000. - Optionally add base pay and a draw, and a target total pay to see the sales you would need.
Commission formulas
The effective commission rate — commission divided by sales — makes different plans comparable.
Worked example
A rep sells $120,000 in a quarter with $2,500 base pay. The plan pays 3% on the first $50,000, 5% from $50,000 to $100,000, and 7% above $100,000.
Marginal: 50,000 × 3% + 50,000 × 5% + 20,000 × 7% = 1,500 + 2,500 + 1,400 = $5,400
Effective rate = 5,400 ÷ 120,000 = 4.5%; total pay = $7,900
Retroactive: 120,000 × 7% = $8,400; total pay = $10,900
To earn $10,000 in total under the marginal plan, the rep needs $150,000 of sales. Under the retroactive plan, about $107,143 is enough, because crossing $100,000 lifts the rate on every dollar.
Comparing commission structures
| Structure | Good for | Watch out for |
|---|---|---|
| Flat rate | Simple, predictable products | No extra reward for top performance |
| Marginal tiers | Rewarding growth without cliffs | Lower effective rate than the top tier suggests |
| Retroactive tiers | Strong push toward quota | Big pay cliff just below a threshold |
| Base + commission | Long sales cycles, steady income | Lower commission rates to compensate |
| Draw against commission | Ramping new reps | Recoverable draws can leave you owing the employer |
Common commission scenarios
- Real estate: A total commission (often split between the listing and buyer’s brokerages, then with each agent’s broker) is a flat percentage of the sale price. Use the flat plan, then apply your split percentage.
- Retail and car sales: Often a percentage of gross profit rather than price — enter the gross profit as the sales amount.
- SaaS and B2B: Commonly a percentage of first-year contract value, with accelerators above quota — model accelerators as tiers.
For the paycheck view, see the gross pay calculator. If your commission arrives as a separate payment, the bonus tax calculator estimates withholding on supplemental wages.
This calculator gives estimates for planning. Your written compensation plan, including clawback, split and timing rules, determines what you are actually paid.
Frequently asked questions
How do I calculate commission?
For a flat plan, multiply total sales by the commission rate: $120,000 of sales at 5% earns $6,000. For a tiered plan, apply each rate to the sales that fall in its range and add the results, unless your plan pays the highest rate reached on all sales.
What is the difference between marginal and retroactive tiers?
With marginal tiers, a higher rate applies only to sales above each threshold — like tax brackets. With retroactive (whole-amount) tiers, crossing a threshold raises the rate on every dollar sold in the period, which creates a large jump in pay right at the threshold.
What is a draw against commission?
A draw is an advance paid each period that is later subtracted from commission earned. If commission exceeds the draw, you receive the difference. If it falls short, a recoverable draw carries the shortfall forward to future periods; a non-recoverable draw does not.
How is commission taxed?
Commission is taxable wages, subject to income tax, Social Security and Medicare. When it is paid separately from regular pay, employers commonly withhold federal income tax at the 22% supplemental rate for 2026, which may be more or less than your final tax.