Commission calculator

Commission Calculator

Work out commission on a flat rate or a tiered plan with accelerators, with or without a base salary. Shows the blended effective rate across all tiers.

Also known as: Sales Commission Calculator · Real Estate Commission Calculator · Tiered Commission Calculator · Broker Commission Calculator

Commission

Flat rate or marginal tiers, with an optional base salary.

Total sales

Commission rate

Base salary

Optional — for the period, not annualised.

Commission

$2,500.00

Effective rate

same as headline

Total pay

$2,500.00

commission only

Marginal tiers, and why the distinction matters

Most tiered commission plans are marginal: crossing a threshold earns the higher rate only on the portion above it. On a plan paying 2% to $10k, 5% to $50k and 10% beyond, $60k of sales earns $200 + $2,000 + $1,000 = $3,200. Not $6,000.

The alternative — paying the top rate on the entire amount once you cross — is called a cliff, and it creates a bizarre incentive. One dollar of extra sales can be worth thousands, so reps sandbag deals until the next period or push a customer over the line at any cost. Marginal tiers avoid that, and this calculator models them.

The number worth watching is the blended effective rate: total commission divided by total sales. In the example above that is 5.33%, not the 10% headline of the top tier. When you are budgeting cost of sales, the blended rate is the real figure and the top tier is marketing.

Add a base salary and the picture changes again. A high base with low commission and a pure-commission plan can pay identically at target while behaving completely differently above and below it — the pure plan is far more volatile in both directions.

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Frequently asked questions

How do you calculate sales commission?+

For a flat plan, multiply sales by the commission rate: 5% of $50,000 is $2,500. For a tiered plan, apply each tier's rate only to the sales that fall within that band, then add the bands together.

What is a tiered commission structure?+

A plan where the rate rises as sales increase, with each rate applying only to the portion of sales in its band. It rewards overperformance without repricing the sales already made at lower rates.

What is the effective commission rate?+

Total commission divided by total sales. On a tiered plan it always sits between the lowest and highest tier rates, and it is the number to use when budgeting, rather than the top tier's headline rate.

What is a typical real estate commission?+

Historically 5–6% of the sale price in the US, split between the listing and buyer agents and then again with their brokerages. Following the 2024 NAR settlement, commissions are more openly negotiable and the buyer-side share is increasingly agreed separately.

Is commission calculated before or after tax?+

Commission is normally calculated on the net sale value, excluding VAT or sales tax, because that tax was never the seller's revenue. Check your specific agreement — some plans use gross, and on a 20% VAT sale the difference is substantial.