Work & Pay

Commission Calculator

Commission on a flat or tiered plan, on revenue or profit — with tiers treated the way they actually work.

Enter your sales and the commission rate.

Commission is paid

On revenue

On profit

Sales

Tiered plan

Different rates as sales climb.

Commission rate

Base salary and draw

Base salary

Draw

An advance repaid out of commission, not a bonus on top.

Exact calculation. Given your inputs, this is the answer — no estimation involved.

How this calculator works

A flat plan is one multiplication. A tiered plan is where the money and the misunderstanding both live.

Tiers work exactly like tax brackets: each rate applies only to the sales inside its own band. A plan paying 5% to $50,000 and 8% above it does not pay 8% on everything the moment you cross the line — it pays 5% on the first $50,000 and 8% only on what comes after. On $80,000 of sales that is $4,900, not the $6,400 the top rate alone suggests.

That matters beyond the arithmetic, because it means a threshold is never a cliff edge. Crossing one cannot reduce your commission, and the extra sale that takes you over is always worth making.

A few plans genuinely are retroactive, applying the highest rate reached to every dollar. It is offered as a choice rather than assumed, because it is much rarer and the difference is large.

A draw is an advance against future commission, not a bonus on top of it. Earning less than your draw is a real outcome, and this reports the shortfall rather than quietly flooring it at zero.

The formula

Exactly what happens to your numbers, step by step.

Flat
```
commission = sales × rate
```

Tiered

each band of sales earns its own rate,
summed across the bands reached

Marginal, like tax brackets — not the top rate on everything.

On profit

commission = (sales − cost of goods) × rate

With a draw
```
paid = max(0, commission − draw)
```

A worked example

$80,000 of sales on a plan paying 5% to $50,000, then 8%, then 10% above $100,000.

What you enter

Sales: $80,000
Tier 1: 5% up to $50,000
Tier 2: 8% up to $100,000

The working

First $50,000: × 5% = $2,500
Next $30,000: × 8% = $2,400
Commission: $4,900
Effective rate: 6.13%
Top rate on everything would be: $6,400

$4,900 — an effective rate of 6.13%

The $1,500 gap between $4,900 and $6,400 is the whole misunderstanding. Anyone reading the plan as "8% once I pass fifty thousand" is expecting a third more than they will receive, and finds out on payday.

Assumptions

Every result here rests on these. Change your inputs and the result changes with them.

Tiers are marginal unless you say otherwise.
Each tier covers the sales above the threshold of the one before it.
A draw is repaid from commission in the same period.
Figures are gross, before any tax withholding.

What this cannot tell you

Every commission plan is a contract, and they vary enormously. Read yours — the details of thresholds, clawbacks and what counts as a sale are all set there rather than by convention.
Clawbacks on refunds and cancellations are not modelled, and on a plan with them your realised commission is lower than what a sale initially earns.
Quotas, accelerators that only apply after a target, and team or split commissions are outside what this handles.
Tax is not deducted. Commission is usually treated as supplemental wages, which are often withheld at a flat rate that differs from your normal paycheck — the Paycheck Calculator covers withholding.

Questions people ask

How is tiered commission calculated?

Each rate applies only to the sales inside its band, the same way tax brackets work. On $80,000 with 5% to $50,000 and 8% above, you earn $2,500 on the first band and $2,400 on the second — $4,900, not $6,400.

Does crossing a tier pay more on everything?

Almost never. Most plans are marginal, so the higher rate applies only to the sales above the threshold. Some plans are genuinely retroactive, and this calculator has a setting for that — but check your plan before assuming it.

What is a draw against commission?

An advance you receive up front and repay out of what you earn. If your commission comes in below the draw, the shortfall usually carries forward against future periods. It is a cash-flow smoothing device, not extra pay.

Is commission taxed differently?

It is taxed as ordinary income, but withholding often differs — employers commonly treat commission as supplemental wages and withhold at a flat rate, which can make a commission check look more heavily taxed than it finally is. The difference settles when you file.

Sources and review

This calculator uses standard arithmetic with no external rules or published rates, so there is nothing to cite beyond the formulas shown above.

Methodology version 1.0.0 · Last reviewed September 10, 2026