Commission Calculator (2024)

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The Commission Calculator can compute any one of the following, given inputs for the remaining two: sales price, commission rate, or commission for a simple percentage commission structure.



This calculator can calculate more complex commission structures, including tiered commissions and commissions that include a base amount.


What is a commission?

In sales, a commission is a form of payment that salespeople earn that is tied to how much of a service or a product they sell. Commissions are a method used to motivate salespeople, since the amount they sell directly impacts the amount that they can earn.

A commission, in its simplest form, is some percentage of revenue. For example, a salesperson may earn 3% of whatever they sell. If a product is sold for $100, the salesperson would earn $3 from that sale. This is not the only model however. Others include paying commissions based on profit earned or commissions paid in the form of bonuses. In some cases, salespeople may be paid entirely based on commission, or their earnings could be a combination of hourly pay or a base salary plus commissions.

Different commission structures

There are many different types of commission structures. In some cases, commissions may be reduced when discounts are granted, making salespeople less likely to provide discounts to make a sale. In others, salespeople might gain commissions based on repeat customers, motivating them to retain customers. Whatever the case, different commission structures provide different motivations to salespeople, and the appropriate commission structure for a given business can help both the business and its salespeople thrive.

This calculator can compute commissions for three different types of commission structures: commission only, base salary plus commission, and tiered commission.

Commission only:

In a commission only structure, a salesperson's compensation is based entirely on their sales. In this type of structure, a salesperson will receive some percentage of the revenue. For example, a real estate agent may receive 3% of the house's price. In this case, if the house was sold for $500,000, the agent receive 3% of that sale, or:

500,000 × 3% = $15,000

In this type of structure, the salesperson will be highly motivated to make sales because their compensation is entirely dependent on it. If they cannot make a sale, they earn nothing. The formula for calculating compensation based on this commission structure is:

sale price × commission percentage = compensation

Base salary plus commission:

In this type of commission structure, a salesperson earns some base salary. In addition, they may earn a commission based on sales made. For example, a salesperson may have a base salary of $500/month with a commission percentage of 1.5%. In this commission structure, a salesperson who sells a $25,000 car will earn:

500 + 25,000 × 1.5% = $875

If they sell 2 cars at the same price, they will earn:

500 + 25,000 × 2 × 1.5% = $1,250

If they sell 1 car for $25,000 and 2 cars for $33,000, they will earn:

500 + (25,000 + 33,000 × 2) × 1.5% = $1,865

In this type of structure, the salesperson is still motivated to sell more cars, since more cars sold results in a higher compensation. However, this type of structure also ensures some degree of security in that even if no sales are made, the salesperson will still make some base salary. This base salary is typically an amount that is reduced relative to other purely salary-based employment opportunities, so selling product is still a necessary part of this pay structure. The formula for calculating compensation based on this commission structure is:

base salary + (n1 × price1 + n2 × price2 + ...) × commission percentage

where n1, n2, n3 and so on indicate the number of items sold for a given sales price. This assumes that more than one type of product is sold. If only one product is sold at a fixed price, then the formula is:

base salary + n × price × commission percentage

The "Sales Price" input of this calculator is the total accumulated sales amount.

Tiered commission calculator:

In a tiered commission structure, commission changes based on the total amount of sales made. For example, a salesperson may earn a 3% commission on sales between $0-20,000. For sales between $20,000-25,000, they may earn a 5% commission, and for sales between $25,000-30,000, they may earn a 10% commission, and so on. Note that this does not mean that a salesperson who sells $27,000 worth of product would earn 10% of $27,000. They only earn 10% on the amount above $25,000, so a salesperson who sells $27,000 worth of product would receive a total commission of:

20,000 × 3% + 5,000 × 5% + 2,000 × 10% = $1,050

In this type of commission structure, salespeople are motivated to sell more because their commission rate increases the more they sell. The formula for determining commission earned based on this commission structure is:

(t1) × c1 + (t2 - t1) × c2 + ... + (sales price - tn-1) × cn

where c1, c2, cn are the commission percentages for each respective tier and t1, t2, tn are the maximum values in each given tier, where n in both cases is the highest tier reached. In the example above, the highest tier reached is the third commission tier, t3, so cn is c3 and t(n-1) is t2. Working the above problem out using the formula:

(20,000) × 3% + (25,000 - 20,000) × 5% + (27,000 - 25,000) × 10% = $1,050

Commission Calculator (2024)

FAQs

How to calculate commission amount? ›

Commission is earnings from a sale. Typically, companies pay out a percentage based on total sales revenue. Commission can be calculated with this formula: commission = total sales revenue * commission rate. Base pay can also be incorporated into this equation by simply adding it to the commission earned.

Is 20% commission a lot? ›

A range of 20%-30% is most often cited as a reasonable commission rate.

Is 30% commission a lot? ›

The industry average for sales commission typically falls between 20% and 30% of gross margins. At the low end, sales professionals may earn 5% of a sale, while straight commission structures allow a 100% commission.

Is 15% commission a lot? ›

What is a typical commission? The typical commission depends on what is being sold. For manufactured goods, the commission rate tends to be around 7%-15% of the sale value. The commission on services tends to be much higher, being between 20%-50%.

How to calculate -%? ›

In mathematics, a percentage is a number or ratio that can be expressed as a fraction of 100. If we have to calculate percent of a number, divide the number by the whole and multiply by 100.

How do you calculate a salary with commission? ›

Add base salary and commission earnings: Add the base salary and commission earnings together to calculate the total earnings for the pay period. Example, if the base salary is $4,000 and the commission earnings are $500, the total earnings would be $4,000 + $500 = $4,500.

Is a 100% commission job bad? ›

This can cause stress. Another challenge is high turnover. Since you're either making money, or you're not, the revolving door of reps leaving seems to never end. Plus, banks often flag 100% commission jobs as “high-risk” on house loans or refinancing applications.

What is a normal commission rate? ›

However, the typical commission rate for sales starts at about 5%, which usually applies to sales teams that have a generous base pay. The average in sales, though, is usually between 20-30%. What is a good commission rate for sales? Some companies offer as much as 40-50% commission.

What is the highest commission paying job? ›

These are a few of the top sales jobs with high commission:
  1. Digital sales. ...
  2. Insurance sales representative. ...
  3. Wholesales representatives. ...
  4. Pharmaceutical sales. ...
  5. Sales consultant. ...
  6. Medical devices sales representative. ...
  7. Real estate agent. ...
  8. Software sales.
Apr 18, 2024

Is commission pay worth it? ›

Commission-based work promotes a higher level of motivation

Employees are often more motivated to do their best work and close a deal if they know their income is attached to it.

Is commission better than hourly? ›

Salaries are more suitable for established positions with a high level of schedule and work predictability, whereas hourly is great for fluctuating work demand. Meanwhile, commission is ideal for positions that directly impact sales.

How to survive a commission-based job? ›

You can start by sitting down and adding up all your regular monthly expenses. Start with fixed expenses, like rent and loan payments. For expenses that vary from month to month, like utility bills, look at your past few months' bills and pick a number that's on the high side of average.

What is the 18 commission on a $500 couch? ›

Final answer: To find the commission from a percentage, use the formula (percentage / 100) * total cost. Applying this formula with a commission rate of 18% on a $500 couch, the commission is $90.

How to hire 100% commission-only sales reps? ›

How to Hire 100% Commission-only Sales Reps in 8 Steps
  1. Step 1: Identify Your Needs and Set Clear Objectives.
  2. Step 2: Utilize Multiple Sales Recruitment Methods.
  3. Step 3: Prioritize Employee Benefits.
  4. Step 4: Explain Your Sales Process Clearly During Interviews.
  5. Step 5: Assess for Cultural Fit and Power Dynamic.
Oct 5, 2023

How much should I get paid for a commission? ›

How much does a Commission make in California? As of Jun 23, 2024, the average annual pay for a Commission in California is $77,663 a year. Just in case you need a simple salary calculator, that works out to be approximately $37.34 an hour. This is the equivalent of $1,493/week or $6,471/month.

What is the meaning of 5% commission? ›

In the simplest definition, the commission is money paid out to a selling agent. For example, if you were selling cars and your selling agent was paid 5%, you would get 95% of the sales price. If you make a sale, you get some portion of the money from the purchaser.

How to calculate gross commission income? ›

GCI = Sales Price x Commission Percentage

So if you are representing the buyer, the gross commission would be $500,000 x 3%, which equals $15,000 in GCI. If you are representing the seller, the gross commission would be $500,000 x 2.5%, which equals $12,500 in Gross Commission Income (GCI).

How to calculate commission on net profit? ›

How do you calculate the net profit commission? Net profit before charging such commission XX% of commission/100+ rate of commission. e.g. if Net profit before charging such commission is 99,000 and rate of commission is 10% then, manager commission will be = 99,000×10/110 = 9000.

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