How to use the Commission Calculator
- Enter total sales booked for the period.
- Enter the base commission rate that applies up to the threshold.
- Enter your base salary for the same period.
- Set the accelerator threshold and the higher rate that applies above it.
How the calculation works
Tiered plans are marginal, not retroactive: only the sales above the threshold earn the accelerated rate, exactly like tax brackets. Reps frequently miscalculate this by applying the higher rate to the entire book.
Splitting earnings into base and variable shows your pay mix. A 50/50 mix is typical for full-cycle sales roles, 70/30 for account management; the more variable the mix, the more the accelerator matters to annual income.
Commission is normally paid on booked or collected revenue net of discounts and returns, and many plans include clawbacks for cancellations inside a defined window. Check which basis your plan uses before treating a booking as earned.
Commission = min(S, T) × r₁ + max(S − T, 0) × r₂; Total = commission + baseSource: WorldatWork Sales Compensation Programs and Practices survey methodology for tiered plan structures.
Worked example
$120,000 of sales, 4% base rate, $50,000 threshold, 6% above, $3,000 base salary.
- First $50,000 at 4% = $2,000.
- Remaining $70,000 at 6% = $4,200.
$6,200 commission plus $3,000 base — $9,200 total for the period.
Frequently asked questions
Is commission taxed differently?+
It is ordinary income, but supplemental wages are often withheld at a flat rate, which can look higher on the payslip and true up at filing.
Should commission be on revenue or gross profit?+
Gross profit aligns incentives better where reps can discount, since it removes the incentive to buy volume with margin.
What is a draw?+
An advance against future commission. A recoverable draw is repaid from later earnings; a non-recoverable one is effectively a guaranteed minimum.
Last reviewed September 1, 2026. We review this page whenever the underlying formula, tax year, published rate or standard changes.