Commission Calculator — Flat & Tiered Sales Commission

Examples

How It Works

A sales commission is a payment made to a salesperson based on the value of sales they generate. It is the most common incentive structure in sales roles and can be calculated in several ways.

Flat-rate commission applies a single percentage to total sales. If you sell $50,000 at a 5% commission rate, you earn $50,000 × 0.05 = $2,500. This is the simplest structure.

Tiered (graduated) commission applies different rates to different portions of sales. For example: 5% on the first $10,000, 7% on the next $10,000, and 10% on everything above $20,000. For $25,000 in sales: ($10,000 × 5%) + ($10,000 × 7%) + ($5,000 × 10%) = $500 + $700 + $500 = $1,700. The effective rate is $1,700 / $25,000 = 6.8%.

Tiered structures reward higher performance — the more you sell, the higher your effective commission rate. The net amount is what remains after the commission is deducted (relevant for employers tracking compensation costs).

Tips & Best Practices

Tiered commission rewards higher sales volumes with better rates, incentivizing top performers.

Track your effective commission rate to compare different compensation structures.

When negotiating, focus on the tier thresholds and rates for your typical sales volume.

Some companies use a draw against commission — an advance that is deducted from future earnings.

Commission calculators are also useful for estimating real estate agent, recruiter, or affiliate earnings.

Related Calculators

Frequently Asked Questions

What is the difference between flat and tiered commission?

Flat commission applies the same percentage to all sales. Tiered commission applies different rates to different portions of sales — typically higher rates for higher sales volumes. Tiered structures result in a blended effective rate.

How do I calculate my effective commission rate?

Divide your total commission earned by your total sales, then multiply by 100. For example, $1,700 commission on $25,000 in sales = 6.8% effective rate.

What is a typical sales commission rate?

Rates vary widely by industry. Real estate agents typically earn 2.5–3% per side. SaaS sales reps often earn 10–15% of deal value. Retail commissions range from 1–10%. Recruiters may earn 15–25% of the placed candidate's first-year salary.

What is a draw against commission?

A draw is a guaranteed advance payment that is later deducted from earned commissions. If your draw is $3,000/month and you earn $4,000 in commission, you receive $1,000 extra. If you only earn $2,000, you may owe back $1,000 (recoverable draw) or it may be forgiven (non-recoverable draw).

How are tiered commissions calculated?

Each tier applies its rate only to the sales amount within that tier's range. For example, with tiers of 5% up to $10K and 8% above $10K: on $15,000 in sales, you earn ($10,000 × 5%) + ($5,000 × 8%) = $500 + $400 = $900.