Calculate sales commission at a flat or tiered rate, total pay with base salary, the effective rate, and the sales needed to earn a target commission.
By AdminDrafted with AI writing toolsUpdated Checked examples: 8
$50,000.00 of sales earns $2,500.00 of commission, an effective 5%, and total pay with the $3,000.00 base is $5,500.00.
Commission is sales × rate. With tiers, a marginal plan pays each rate only on the sales inside its tier, like tax brackets; a whole-amount plan pays the rate of the highest tier reached on every dollar. Base salary is added to get total pay, and commission ÷ sales gives the effective rate. Working backwards, the calculator finds the sales needed for a target commission, or the flat rate implied by a sale and its commission.
With the defaults, $50,000 of sales at a flat 5% earns $2,500 of commission, and a $3,000 base brings pay to $5,500. Under the example tiers of 3% to $25,000, 5% to $75,000 and 7.5% above, $100,000 of sales earns $5,125 on a marginal plan and $7,500 on a whole-amount plan.
Enter one tier per line as the sales amount where it starts and its rate. Returns, draws against commission and caps are not modelled.
Multiply the sales amount by the commission rate written as a decimal: commission = sales × rate. A 5% commission on 50,000 of sales is 50,000 × 0.05 = 2,500, and a 3,000 base salary for the same period brings total pay to 5,500. Tiered plans apply different rates to different slices of sales.
A target is for commission alone. With a 3,000 base, a 5,000 commission target means 8,000 of total pay.
Take tiers of 3% up to 25,000 of sales, 5% from 25,000 to 75,000 and 7.5% above 75,000. On 100,000 of sales, the two common plan types pay very differently:
| Scenario | Commission earned | Total pay |
|---|---|---|
| Default | 2500.00 | 5500.00 |
| Marginal tiers | 5125.00 | 5125.00 |
| Whole tiers | 7500.00 | 7500.00 |
Default is 5% of 50,000 with the 3,000 base. The tiered rows use the same 100,000 of sales with no base pay, so commission and total pay match.
On a whole-amount plan, crossing a tier start raises the rate on every unit already sold. At 74,999 of sales the 5% tier pays 3,749.95; at 75,000 the 7.5% tier pays 5,625, so one more unit of sales adds 1,875.05.
On the marginal plan the same step adds 0.05, from 3,249.95 to 3,250. A deal that closes just before or after a boundary can therefore change whole-amount pay by far more than its own commission.
To earn 5,000 on the marginal plan, the first two tiers pay 3,250 by 75,000 of sales. The remaining 1,750 at 7.5% takes 1,750 ÷ 0.075 = 23,333.33 more, so 98,333.33 in total.
On the whole-amount plan, 75,000 of sales already pays 5,625. The smallest sales figure that reaches a target can pay well above it, because pay jumps at the boundary.
The effective rate is commission ÷ sales: 5,125 ÷ 100,000 = 5.125% on the marginal plan. The rate on the next unit of sales is the top tier's 7.5%. Use the effective rate to compare plans, and the rate on the next sale to see what extra sales earn.
A US employee paid by commission is exempt from overtime under FLSA section 7(i) only if all three conditions hold:
With a 3,000 base and 2,500 of commission, commission is 45.5% of pay, so the exemption fails (DOL Fact Sheet #20).
The formulas here use the sales amount as given, with no returns, draws or caps, so net those out first.
0 3%, 25000 5%, 75000 7.5%.10000 5% pays 1,000 on 30,000 of sales.For withholding on a regular paycheck, use the paycheck calculator. To turn total pay into an hourly rate, use the salary to hourly calculator, and for the sales a business needs to cover its costs, the break-even calculator.
Checked against: Hand calculation: 50,000 × 0.05 = 2,500; 2,500 + 3,000 = 5,500; 2,500 ÷ 5,500 = 45.45%
Checked against: Hand calculation: 3% × 25,000 + 5% × 50,000 + 7.5% × 25,000 = 750 + 2,500 + 1,875
Checked against: Hand calculation: the 7.5% tier is reached, so 7.5% × 100,000
Checked against: 750 + 2,500 = 3,250 by 75,000; 75,000 + 1,750 ÷ 0.075 = 98,333.33
Multiply the sale by the commission rate written as a decimal. A 5% commission on a $50,000 sale is 50,000 × 0.05 = $2,500. With a base salary of $3,000 for the same period, total pay is $5,500. To find the rate from a paid commission, divide commission by sales: $1,800 on $40,000 is 4.5%.
On a marginal (graduated) plan each rate applies only to the sales within its band. With 3% up to $25,000, 5% from $25,000 to $75,000 and 7.5% above, $100,000 of sales pays 750 + 2,500 + 1,875 = $5,125, an effective 5.125%. On a whole-amount plan the 7.5% tier reached applies to all $100,000, paying $7,500. Check which method your plan uses.
Divide the target by the rate on a flat plan: $5,000 at 5% needs $100,000 of sales. On the marginal tiers above, the first two tiers pay $3,250 by $75,000 of sales, and the remaining $1,750 at 7.5% takes $23,333.33 more, so $98,333.33 in total. On the whole-amount version, $75,000 of sales already pays $5,625.
There is no set rate: commissions are negotiable between the client and the brokerage. Under the National Association of Realtors settlement, in force since 17 August 2024, offers of compensation can no longer appear on the multiple listing service, and agents working with a buyer need a written agreement before touring a home. Whatever rate is agreed, commission = sale price × rate, split between the brokerages as they agree.
Usually yes. A retail or service employee is exempt from overtime under section 7(i) of the Fair Labor Standards Act only if the regular rate exceeds 1.5 times the minimum wage in overtime weeks and more than half of total earnings over a representative period are commissions (DOL Fact Sheet #20). With a $3,000 base and $2,500 of commission, commission is 45.5% of pay, so the exemption does not apply.
For planning only. Lenders, tax authorities and markets apply their own rounding, fees and rules; confirm figures with them before you commit.
This calculator includes 8 worked examples with independently sourced answers. They run in the test suite, and you can run them here too.