How to use this calculator
- Enter your Sales amount for the period you are looking at, such as a month.
- Set the Commission rate as a percentage of sales and add any Base pay for the same period.
- If commission only applies above a quota, enter it in Commission starts after.
- Read Commission and Total pay, and check how much of your pay is variable.
How commission is calculated
Straight commission is a percentage of sales. When a quota applies, only the sales above it count. Total pay is base pay plus commission.
Commission = max(0, Sales − Quota) × Rate ÷ 100- Sales = amount sold in the period
- Quota = sales before commission starts (0 if none)
- Rate = commission percentage
- Total pay = Base pay + Commission
The effective rate is commission divided by all sales, which is lower than the stated rate whenever a quota applies.
Example: $50,000 in sales at 5%
With $50,000 of sales, a 5% rate and $2,000 base pay for the month, commission is $2,500 and total pay is $4,500. Commission is 55.56% of that pay, so more than half of the income varies with sales.
Now add a $20,000 quota. Only $30,000 earns commission, so commission falls to $1,500 and total pay to $3,500. The effective rate on all sales is 3%, not 5%.
How to judge a commission plan
A higher rate is not automatically better. Compare plans by total pay at the sales level you can realistically reach, not the best case. Check how much of your pay depends on commission: the higher that share, the more your income swings from month to month.
If you are comparing offers with different base pay and rates, run each plan at low, typical and strong sales levels. Convert the result to a yearly figure and a rate per hour worked with the hourly to salary calculator.
Questions to ask before accepting a plan
- Is the rate fixed, or does it change in tiers as sales rise?
- Is commission paid on revenue, gross profit or collected payments?
- What happens to commission on refunds, cancellations or late-paying customers?
- Is there a draw against future commission that you may have to repay?
- Are there caps, or a clause allowing the plan to change during the year?
Assumptions and limits
The calculator uses one flat rate and one optional quota. It does not model tiered or accelerator rates, caps, draws, clawbacks or team splits, and it ignores income tax and payroll deductions. Many employers also pay commission as supplemental wages, which may be withheld differently, so your take-home amount will be lower than the total shown. For overtime pay on top of base wages, see the overtime calculator. Your written compensation plan is the final authority on how commission is calculated.
Frequently asked questions
How do I calculate commission?
Multiply the sales amount by the commission rate. If there is a quota, subtract it from sales first and apply the rate only to what is left.
What is the effective commission rate?
It is commission divided by total sales. With a quota it is lower than the stated rate because part of your sales earns nothing.
Is commission paid before or after tax?
The amount is quoted before tax. Taxes and deductions are taken from it, so your take-home pay is lower.
What is a draw against commission?
It is an advance on future commission. Check your plan to learn whether it must be repaid if you do not earn enough.
Can I use this for monthly and yearly figures?
Yes. Enter sales and base pay for the same period, either a month or a year, and the results match that period.