Commission Calculator
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Tiered Commission Calculator
Work out commission plans that include a base amount, a single flat rate, or rates that step up as the sale grows. Each tier's rate applies only to the part of the price inside that tier. Leave a tier's upper limit blank for no upper limit.
Press Calculate to see the results.
Use this commission calculator to find a sales commission from the price and rate, or the rate or price from the other two, and to work out tiered commission plans with a base amount.
The first calculator handles the everyday case of one flat percentage: enter any two of the sales price, commission rate and commission, and it finds the third. The tiered calculator below it covers plans with a base amount, a fixed dollar commission, or rates that change as the sale grows.
What is a commission?
A commission is pay tied to results: a fee, usually a percentage of a sale, paid to the person or firm that made the sale or arranged the deal. Real estate agents, car salespeople, insurance agents, recruiters, stockbrokers, and many business-to-business sales reps earn some or all of their income this way. Commission rewards performance and lets employers keep fixed costs down, since they pay more only when revenue comes in. For workers, it can mean high earnings in good months and lean ones when sales slow. In the US, commissions are taxable wages, and employers withhold income and payroll taxes on them like other pay.
Commission = Sales price × Commission rate
- Commission rate
- as a decimal: 3% = 0.03
Rate = Commission ÷ Sales price, and Sales price = Commission ÷ Rate. In a tiered plan, apply each tier's rate to the part of the sale within that tier and add the results.
Different commission structures
Commission plans come in many shapes. The right one depends on the sales cycle, how much the employer wants to share risk, and what behavior it wants to encourage.
Straight commission. All pay comes from commission, with no salary. A real estate agent who earns a share of each closed sale is the classic example. It offers unlimited upside but no income when nothing sells. In the US, employers must still ensure non-exempt employees earn at least the minimum wage for hours worked, though outside sales staff are exempt from that rule.
Base salary plus commission. A fixed salary provides stability, and commission adds an incentive on top. A common split is 60% base and 40% variable at target, though it ranges widely by industry. This is the most common structure in corporate sales.
Draw against commission. The employer advances a set amount each pay period, which is later subtracted from commissions earned. With a recoverable draw, any shortfall carries forward and must be earned back; with a non-recoverable draw, the advance works as a guaranteed minimum.
Tiered (graduated) commission. Rates rise as sales pass thresholds, rewarding top performers. With the defaults in the tiered calculator, a $200,000 sale earns 3% on the first $20,000 ($600) and 5% on the remaining $180,000 ($9,000), for $9,600 in total, an effective rate of 4.8%. Some plans apply the higher rate to the entire sale once a threshold is reached, which creates a much larger jump in pay; this calculator applies each rate only to the portion within its tier.
Flat-rate commission. A fixed dollar amount per unit or deal, regardless of price, such as $300 for each car sold or $50 per policy written.
Revenue vs. gross-margin commission. Paying on revenue is simple but can encourage discounting. Paying on gross profit, as many car dealerships and distributors do, aligns the salesperson with the company's margin.
Residual commission. Ongoing payments for as long as the customer keeps paying, common in insurance renewals, subscription software and financial advice.
Real estate deserves a note. Total commissions on US home sales have historically run around 5% to 6% of the price, split between the listing and buyer's brokerages, and each brokerage then shares its portion with the individual agent. After the 2024 National Association of Realtors settlement, buyer-agent compensation is negotiated separately and is no longer advertised on MLS listings, and rates are increasingly open to negotiation. On a $200,000 home, a 3% side of a commission is $6,000 before the agent's split with their brokerage.
| Plan | On $200,000 in sales | Commission |
|---|---|---|
| Straight 3% | $200,000 × 3% | $6,000 |
| $1,000 base + 3% | $1,000 + $6,000 | $7,000 |
| Tiered: 3% to $20,000, then 5% | $600 + $9,000 | $9,600 |
| Flat $250 per deal, 10 deals | 10 × $250 | $2,500 |
Frequently asked questions
How do you calculate commission?
Multiply the sales price by the commission rate. A 3% commission on a $200,000 sale is $6,000.
How does tiered commission work?
Each rate applies to the slice of sales within its tier. With 3% up to $20,000 and 5% above, a $200,000 sale pays $600 + $9,000 = $9,600.
How do I find my commission rate?
Divide the commission by the sales price and multiply by 100. $4,500 on a $150,000 sale is a 3% rate.
Is commission taxed differently from salary?
No, it is taxable wages. Employers often withhold federal income tax on commissions paid separately from salary at a flat 22% supplemental rate, but your actual tax is settled on your annual return.
Results are estimates for educational purposes and are not financial, tax or legal advice. Confirm figures with a qualified professional or your lender.
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