How to calculate commission
Commission = Sale amount × Commission rate Example: $10,000 sale at 5% Commission = 10,000 × 0.05 = $500 If you earn a base salary plus commission, total earnings are simply base + commission — tick the base salary option to see the combined figure. On the other side of the deal, "amount after commission" shows what remains of the sale once the commission is paid out — the number a home seller cares about when the agent takes their percentage.
Tiered commission — applied like tax brackets
Graduated commission plans pay higher rates as sales volume grows. The crucial detail is that tiers are almost always marginal: each rate applies only to the portion of sales inside that tier, not to the whole amount.
Tier 1: 3% on the first $10,000 → $300 Tier 2: 5% on $10,000 – $25,000 → $750 Tier 3: 7% on the remaining $5,000 → $350 Total commission = $1,400 (effective rate 4.67%) Reaching the 7% tier does not mean earning 7% on everything — the effective rate here is 4.67%, a blend of all three tiers. Some plans do work the other way, applying a single rate to the entire amount once a threshold is reached ("retroactive" or cliff plans); for those, use the Simple tab with the rate your volume has unlocked.
Typical commission structures
| Industry | Common structure |
|---|---|
| Real estate | 5–6% of sale price, usually split between agents and brokerages |
| Retail sales | Flat 5–15% per sale, sometimes on top of hourly pay |
| SaaS / B2B sales | Base salary + ~8–12% of contract value, often tiered against quota |
| Insurance | High first-year percentage, smaller renewal commissions |
| Recruitment | 15–25% of the placed candidate's first-year salary |
These are broad conventions, not rules — actual rates vary widely by company, region, and negotiation.
Frequently asked questions
How do I calculate my sales commission?
Multiply the sale amount by your commission rate. A $10,000 sale at 5% pays $500. If your plan is tiered, apply each tier's rate only to the sales that fall within that tier and add the pieces up — the Tiered tab does this automatically.
What is a tiered commission structure?
A plan where the commission rate increases at set sales thresholds — for example 3% up to $10,000, 5% up to $25,000, and 7% beyond. Each rate normally applies only to the sales inside its band, the same way income tax brackets work, so crossing a threshold never reduces your total pay.
What is an effective commission rate?
Total commission divided by total sales, as a percentage. On a tiered plan it always sits between the lowest and highest tier rates — earning $1,400 on $30,000 of sales is an effective rate of 4.67%, even if your top tier pays 7%.
Is commission calculated before or after taxes?
Commission is calculated on the sale amount and paid as gross income — taxes are then withheld from it like any other earnings. All figures in this calculator are gross, before taxes and deductions.
Is commission based on revenue or profit?
It depends on the plan. Most sales commissions are a percentage of revenue (the sale price), but some plans pay on gross profit or margin instead, which rewards selling at better prices. Check your agreement — and enter whichever figure your plan uses as the "sale amount."
Commission on profit rather than revenue? Work out the margin first with the Profit Margin Calculator.