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Commission Calculator
Work out your commission from sales at a flat or tiered rate, see total pay with your base salary, and find the sales you need to hit an income goal.
Commission formulas
Flat rate: Commission = Sales × Rate. Tiered: sales up to the threshold earn the base rate and sales above it earn the higher rate.
Examples
- Flat: $2,000 base pay plus 5% of $50,000 in sales = $2,000 + $2,500 = $4,500. To reach $5,000 you need $60,000 of sales.
- Tiered: 5% up to $40,000 and 8% above. On $50,000 of sales: 5% × $40,000 = $2,000, plus 8% × $10,000 = $800, so $2,800 of commission.
Common commission structures
- Base plus commission: a steady salary with commission on top, common in retail and B2B sales.
- Straight commission: pay comes entirely from commission; common for real estate agents and some financial advisers.
- Draw against commission: a guaranteed advance that is repaid from later commission.
- Gross margin commission: a percentage of profit rather than revenue, which rewards selling without heavy discounts. See the margin calculator.
Frequently asked questions
How do you calculate commission?
Multiply the sales amount by the commission rate. $50,000 of sales at 5% is $2,500 of commission. For a percentage of profit instead of sales, use the gross profit figure.
What is a tiered commission?
A plan where the rate rises once you pass a sales threshold, for example 5% on the first $40,000 and 8% on sales above that. Only the sales above the threshold earn the higher rate.
How is commission taxed?
Commission is supplemental wages, like a bonus. If paid separately, employers usually withhold a flat 22% federal tax plus Social Security, Medicare and state tax. Use the bonus tax calculator to see your take-home.