Commission Calculator
Commission Tips
- •Understand your commission structure thoroughly
- •Track your sales to project earnings
- •Know when tier thresholds reset
- •Consider accelerators for exceeding quotas
Related Calculators
Understanding Commission Structures
Types of Commission Plans
Flat Rate
A single percentage applied to all sales. Simple to calculate and understand. Common for straightforward sales roles.
Example: 5% on all sales
Tiered
Different rates for different portions of sales. Each bracket earns at its own rate, like tax brackets.
Example: 3% on first $10K, 5% on next $15K
Sliding Scale
One rate applies to ALL sales, determined by total volume achieved. Hitting higher tiers improves rate on everything.
Example: 5% on all sales if over $25K total
Tiered vs Sliding Scale Example
Consider $35,000 in sales with these tiers: 3% up to $10K, 5% for $10K-$25K, 7% over $25K
Tiered Calculation
- $10,000 x 3% = $300
- $15,000 x 5% = $750
- $10,000 x 7% = $700
- Total: $1,750
Sliding Scale Calculation
- Sales exceed $25K threshold
- 7% rate applies to all sales
- $35,000 x 7% = $2,450
- Total: $2,450
Common Commission Terms
- Base Salary: Fixed compensation regardless of sales performance
- Draw: Advance against future commissions, must be paid back
- Quota: Sales target to achieve, may trigger bonuses or higher rates
- Accelerator: Increased rate for sales beyond quota
- Decelerator: Reduced rate for underperforming against quota
- Clawback: Commission taken back if sale is cancelled or refunded
Compensation Models
| Model | Description | Best For |
|---|---|---|
| Commission Only | No base salary, 100% commission | Experienced sales pros |
| Base + Commission | Fixed salary plus commission | Most common, balanced |
| Base + Bonus | Salary with performance bonuses | Account managers |
| Draw Against Commission | Guaranteed pay repaid from commissions | New sales reps |
Negotiating Tips
- • Understand how and when commissions are paid
- • Clarify clawback policies for cancelled deals
- • Know if territory or account changes affect pending commissions
- • Get the commission plan in writing
Frequently Asked Questions
What is the difference between tiered and sliding scale commission?
With tiered commission, different rates apply to different portions of sales (like tax brackets) - you earn 3% on the first $10,000, 5% on the next $15,000, etc. With sliding scale, hitting a threshold changes the rate on ALL sales - if you exceed $25,000 total, you might earn 7% on everything. Sliding scale typically pays more for high performers.
What is a typical sales commission rate?
Commission rates vary widely by industry. Real estate agents typically earn 2.5-3% per side. Car salespeople might earn 20-30% of the dealer profit. Software sales often see 5-15% of contract value. Inside sales may earn 5-10% while complex enterprise sales might earn 10-20% or more. Base salary levels inversely affect commission rates.
What is a draw against commission?
A draw is a guaranteed minimum payment that is later deducted from earned commissions. For example, if you have a $3,000 monthly draw and earn $5,000 in commissions, you receive $5,000 total (not $8,000). If you earn only $2,000, you still receive $3,000 but 'owe' the $1,000 difference. Draws help new salespeople ramp up but can create debt if sales are low.
What are commission accelerators and decelerators?
Accelerators increase your commission rate after you hit quota - for example, 10% commission up to quota, then 15% on everything above it. Decelerators do the opposite, reducing rates if you underperform (e.g., 10% normally, but only 5% if under 80% of quota). These mechanisms reward top performers and motivate achievement.