How to calculate sales commission
- Enter the sales amount for the period, and the base salary if you want to see total pay.
- Choose the plan type. A flat rate pays the same percentage on everything. Tiered plans pay higher rates as sales grow.
- Edit the tiers to match your compensation plan: the sales level where each tier starts and its rate. The breakdown shows exactly how the commission is built up.
Marginal versus retroactive tiers
Tiered commission plans come in two flavours, and the difference can be thousands. In a marginal plan, which works like income tax bands, each rate applies only to the sales within its band: with 3% up to 50,000, 5% up to 100,000 and 8% above, sales of 135,000 earn 1,500 + 2,500 + 2,800 = 6,800. In a retroactive plan, reaching a tier applies its rate to the whole amount, so the same sales would earn 8% of 135,000 = 10,800. Retroactive plans create strong incentives near thresholds, and also big cliffs: one sale can change pay dramatically.
The "next tier" card shows how much more you need to sell to reach the next rate, which is useful for planning the end of a quarter. Real plans often add accelerators above quota, caps, clawbacks for cancelled deals and different rates for new and renewal business; read your plan document carefully and use this as a calculator, not a contract. All figures stay in your browser.
What is a typical sales commission rate?
It varies by industry: around 5–10% of revenue is common in B2B, while software sales often pay about 10% of first-year contract value.
What is an accelerator?
A higher commission rate for sales above quota, rewarding over-performance. Model it as an extra tier starting at your quota.
Is commission calculated on revenue or profit?
Most plans use revenue or contract value. Some pay on gross profit to discourage heavy discounting.