Business Tools
Sales Commission Calculator
Calculate sales commissions with tiered rates and bonuses. Compute total earnings, monthly/annual projections, and commission breakdown.
Use Sales Commission Calculator to get instant results without uploads or sign-ups. Everything runs securely in your browser for fast, reliable output.
Your results will appear here.
About this tool
Sales commissions incentivize performance. Common structures: flat rate (5% on all sales), tiered (5% on first $50K, 7% above), or accelerators (increasing rates at higher volumes).
Industry averages: Tech sales 10-15%, Real estate 2.5-6%, Insurance 5-10%, Retail 1-5%, B2B services 8-12%. Higher value/complexity = higher commission rates. Use this calculator to estimate earnings and plan compensation structures.
Usage examples
Flat Commission
5% on all sales
$100,000 sales × 5% = $5,000 commission
With Bonus
Hit quota bonus
$80,000 sales × 8% + $2,000 bonus = $8,400 total
Annual Projection
Monthly to yearly
$5,000/month × 12 = $60,000 annual commission
How to use
- Enter "Sales Amount" (total sales revenue).
- Enter "Commission Rate %" (percentage earned).
- Add "Bonus Amount" if applicable.
- View total earnings and projections.
Benefits
- Tiered commission support
- Bonus calculation
- Monthly/annual projections
- Total earnings breakdown
- Multiple commission scenarios
- Take-home estimate
FAQs
How do sales commissions work?
Commission = Sales Amount × Commission Rate %. Salesperson earns percentage of sales they generate. Example: $50,000 sales × 8% = $4,000 commission. Structures vary: straight commission (no base salary), base + commission (salary + %), draw against commission (advance on future earnings). Payment timing: monthly, quarterly, or upon customer payment. Track gross sales vs net sales (after returns/discounts).
What is tiered commission structure?
Tiered = different rates at different sales levels. Incentivizes higher performance. Example Tier 1: $0-$50K at 5%, Tier 2: $50K-$100K at 7%, Tier 3: $100K+ at 10%. On $120K sales: ($50K × 5%) + ($50K × 7%) + ($20K × 10%) = $2,500 + $3,500 + $2,000 = $8,000. Each tier compounds. Higher tiers = higher total earnings. Common in tech, real estate, insurance.
What are common commission rates by industry?
Software/SaaS: 10-15% (high value, complex sale). Real estate: 2.5-6% (split between agents). Insurance: 5-10% first year, 2-5% renewals. Retail: 1-5% (high volume, low complexity). Financial services: 8-12%. B2B services: 8-12%. Car sales: 20-25% of dealer profit. Rates vary by: product complexity, sale size, sales cycle length, market competition. Higher complexity/value = higher commission rate.
How do commission bonuses work?
Bonuses reward performance beyond commission. Types: Quota bonus (hit 100% of target), Accelerator bonus (exceed quota), Spiff (specific product/promotion), Team bonus (collective achievement). Example: Base commission 8%, but if exceed quota get $5,000 bonus + 10% on excess. On $150K quota: Scenario A (100%): $150K × 8% = $12K. Scenario B (120%): $150K × 8% + $30K × 10% + $5K = $20K. Bonuses motivate overachievement.
Should commission be calculated on gross or net sales?
Gross sales = total before deductions. Net sales = after returns, discounts, cancellations. Most companies use net (fairer - don't pay commission on refunded sales). Example: Sell $100K, customer returns $10K. Gross commission: $100K × 5% = $5K. Net commission: $90K × 5% = $4.5K. Clawback = recovering commission on refunded sales. Always clarify gross vs net in commission plan. Industry standard: net sales for commission calculation.
How do I calculate my annual commission earnings?
Method 1 (Average): Monthly commission × 12. Method 2 (Pipeline): Sum of expected deals × close rate × commission rate. Method 3 (Goal-based): Annual quota × expected attainment % × commission rate. Example: Average $8K/month → $96K/year. Or: $1M quota, expect 120% attainment, 10% rate → $1.2M × 10% = $120K. Add base salary if applicable. Account for: seasonality (Q4 higher?), ramp time (new sales role), pipeline health. Conservative estimate: use 80% of goal.
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