Commission Calculator

On a flat rate, commission is the sales times the rate. Your pay for the period adds any base pay:

Tiered plans come in two kinds, and the tool does both. Paid band by band, each rate applies only to the sales inside its band, the way tax brackets work. Paid on the whole amount, reaching a tier moves every dollar of sales to that tier's rate:

The effective rate is the commission divided by the sales. To find the sales a pay target needs, the tool works the plan backwards. It takes off the base pay, then walks up the bands until the commission covers the rest.

A draw against commission pays a fixed amount each period and settles it against what you earned, as described in 29 CFR 779.413. With a recoverable draw, a short month leaves a balance you owe, taken out of later commission above the draw. A non-recoverable draw never takes it back:

Dana: base pay plus 6%

Dana sells on a showroom floor for $2,500 a month plus 6% of sales. This month she sold $60,000, so her commission is $3,600.00 and her pay is $6,100.00. She wants an $8,000 month next time. Her base covers $2,500 of it, and earning the rest at 6% needs $91,666.67 in sales.

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Sam rebuilds a tiered statement

Sam is an account executive on 8% up to $40,000, 10% up to $80,000 and 12% above, with a $4,000 base. He closed $62,000. The first band pays $3,200.00 and the next $22,000 pays $2,200.00, so his commission is $5,400.00 and his pay $9,400.00. His effective rate is 8.71%, but the next $1,000 he sells earns $100.00. A $10,000 month needs $68,000.00 in sales.

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Lee starts on a draw

Lee is new and gets a $3,000 recoverable draw each month, on 5% up to $10,000, 7% up to $50,000 and 10% above. Lee sells $24,000, $38,000, $61,000, $45,000 over four months, which earns $1,480.00, $2,460.00, $4,400.00, $2,950.00.

Lee is paid $3,000.00 every month. The two slow months leave $2,060.00 owed. March pays back $1,400.00 of it, and April's short month adds a little again, so Lee owes $710.00 at the end of April. On a non-recoverable draw Lee would keep everything paid, $13,400.00 in total.

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The effective rate is always below your top band on a band-by-band plan, because the first dollars earn the lower rates. Use it to compare plans. Use the top band reached to judge what one more sale is worth.

Plans that pay on the whole amount have a jump at each tier. With 5%, 7% and 10% tiers, sales of $49,999 pay $3,499.93, while $50,000 pays $5,000.00. On $60,000, the same tiers pay $4,300.00 band by band and $6,000.00 on the whole amount. The chart draws both lines so the jumps stand out. Sales often bunch just past a threshold for this reason.

The figures here are before tax. Commission-only workers are still owed minimum wage and overtime unless an exemption applies. The U.S. Department of Labor's Fact Sheet 20 lists the retail exemption: a regular rate above one and a half times the minimum wage, and more than half of pay from commission. In California, a commission plan must be in writing and say how commission is worked out and paid, according to the state's labor department.

• Paying the top rate on everything. If Sam's plan pays band by band, his $62,000 earns $5,400.00, not the $6,200.00 that 10% of every dollar would give. Your plan document says which way it pays.
• Using gross sales when the plan pays on net. Many plans take returns, cancellations and unpaid invoices out first. Enter the sales figure your plan counts.
• Treating a recoverable draw as salary. Lee was paid $12,000.00 but earned $11,290.00 in commission. The gap of $710.00 comes back out of later commission.
• Mixing up periods. Tiers that reset each month, quarter or year give very different pay. Enter the sales for the same period the tiers use.
• Plans on gross margin. If the rate applies to profit rather than revenue, enter the margin in dollars as the sales.