Commission Calculator
Calculate sales commission earnings and compensation payouts based on gross sale volume.
Commission Output
Structures, splits, and what actually lands
Commission is usually a percentage of sale value, but the base varies and the difference is substantial. Commission on revenue pays on the headline sale; commission ongross margin pays on revenue minus cost of goods, which aligns the seller with profitability and discourages discounting to close. Selling $100,000 at 10% of revenue pays $10,000; at 10% of a 40% margin it pays $4,000.
Tiered structures pay a rising rate as thresholds are cleared, and they are generally marginal — the higher rate applies only to sales above the threshold, not retroactively to everything. Read the plan carefully on this point, because retroactive tiers exist and change the arithmetic dramatically near a boundary. Draws are advances against future commission, recoverable or non-recoverable, and a recoverable draw in a bad quarter becomes a debt.
In real estate the total commission is typically split several ways — between listing and selling sides, then again between each agent and their brokerage — so an agent's share of a headline 5-6% is usually a quarter of it or less. Everywhere, check the claw-back terms: commission on a sale that later refunds or cancels is frequently recovered from a later pay cycle.
Frequently asked questions
How is sales commission calculated?
Commission = Total Sales Amount × Commission Percentage Rate / 100.
How is sales commission calculated?
Usually as a percentage of revenue or of gross margin. Tiered plans raise the rate above thresholds - say 5% to quota and 8% beyond - which is what makes the last deal of a quarter disproportionately valuable to a rep. Margin-based commission aligns incentives better when discounting is possible.
What is the difference between draw against commission and salary plus commission?
A draw is an advance against future commission that must be earned back; if it is recoverable, a bad month creates a debt to the employer. Salary plus commission pays a guaranteed base with commission on top and creates no such liability. The distinction matters enormously in a slow quarter.
What is On-Target Earnings?
OTE is base salary plus the commission earned at exactly 100% of quota. It is a projection, not a promise - actual earnings depend on attainment, and the realistic question when evaluating an offer is what proportion of the team actually hits quota, not what OTE says.