Commission Calculator · Practical guide
How to Calculate Sales Commission
The flat-rate and tiered formulas every salesperson should know, with worked examples.
At a glance
The Short Answer
For a flat-rate plan, commission = sales × rate: $25,000 in sales at 8% pays $2,000. For a tiered plan, apply each rate to only the slice of sales within that tier, then add the slices together.
Interactive tool
Commission Calculator
Enter your own values, then compare the result with the examples below.
Commission Results
Flat-Rate Commission
The simplest structure pays one percentage on everything you sell: Commission = Sales × Rate. Sell $40,000 at 6% and you earn $2,400. Your effective rate always equals your stated rate.
Tiered Commission
Tiered plans raise the rate as sales climb — for example, 5% on the first $10,000, 7% on the next $10,000, and 10% on everything above $20,000. Each rate applies only to its own band:
- First $10,000 × 5% = $500
- Next $10,000 × 7% = $700
- Remaining $5,000 × 10% = $500
On $25,000 in sales, that totals $1,700 — an effective rate of 6.8%, lower than the headline top-tier rate of 10%.
Check Your Effective Rate
Effective rate = total commission ÷ total sales. It is the number that matters when comparing job offers or compensation plans, because a plan with a flashy top tier can still pay less overall than a higher flat rate. The calculator above computes commission, effective rate, and the tier-by-tier breakdown for both structures.
Frequently Asked Questions
What is the formula for commission?
Flat plans: sales × rate. Tiered plans: sum of (sales within each tier × that tier's rate).
Is commission calculated on gross or net sales?
Usually gross sales, but some plans pay on net revenue or gross margin after returns and discounts. Check your compensation plan's definition before calculating.
How do I calculate commission with a base salary?
Compute the commission separately using the flat or tiered method, then add it to your base salary for the period. This calculator handles the commission portion.
When is commission typically paid?
Most plans pay monthly or quarterly in arrears, after the company confirms the sale and payment. Timing does not change the calculation itself.