Commission Calculator

One rate, one sale amount, one payout. This page does flat-rate commission and nothing else, and saying so up front saves you discovering it halfway through a compensation model.

The calculation

A contract worth 85,000 at a flat 5%:

• Commission payout: 4,250.00
• Retained by the business: 80,750.00

Commission = sale amount × rate ÷ 100

That is the entire mechanism. The second row is simply the remainder, which is useful when you are modelling the cost of a sales team rather than an individual's earnings.

Tiers are not supported, and here is how to handle them anyway

Tiered structures, accelerators past quota, splits between reps and clawbacks on cancelled deals are all outside what this does. There is no tier input, no threshold field and no accelerator.

Tiered plans are still perfectly calculable — you just have to run the tool once per band and add the results. For a plan paying 5% on the first 50,000 of a deal and 8% on the remainder, an 85,000 contract works out as:

1. 1Enter 50,000 at 5%. Payout: 2,500.00.
2. 2Enter 35,000 at 8%. Payout: 2,800.00.
3. 3Add them: 5,300.00.

The critical detail is that each rate applies only to the portion of the sale falling inside its band, not to the whole deal. Applying the top-band rate to the entire amount would give 6,800.00 — a 1,500.00 overstatement. If your payroll and your own arithmetic disagree, this is the first thing to check.

The payout is gross

What lands in a bank account is smaller than what this page shows. Depending on the arrangement, the following come out afterwards:

• Income tax and, for self-employed reps, self-employment or national insurance contributions. Commission is usually taxed as ordinary income and may be withheld at a higher supplemental rate than salary.
• Brokerage or agency splits. In real estate and insurance especially, the commission on a transaction is divided between firm and agent before the agent is paid.
• Draw recovery. Where a rep is advanced against future commission, the outstanding draw balance is deducted before payment.
• Clawbacks. If the customer cancels or defaults inside the contract's stated window, commission already paid may be reclaimed. This is a real risk on subscription and insurance products and it is not modelled here.

What counts as the sale amount

Getting this input wrong causes more disputes than the rate does. Contracts commonly specify commission on one of several different bases:

• Total contract value versus first-year value, which differ enormously on a multi-year subscription.
• Gross revenue versus net of discounts, refunds and shipping.
• Booked versus collected, where nothing is payable until the customer pays.

Read the plan document and enter the base it names. The calculator will faithfully compute a percentage of whatever you type, including the wrong number.

Try these next

To convert a percentage in the other direction, or work out what one figure is as a share of another, use the percentage calculator. To see how commission as a variable cost affects the volume you need, use the break-even calculator. To check what a discount granted by a rep does to the margin, use the profit margin calculator.