How is commission calculated?

Multiply the sale amount by the commission rate: a 5% commission on a $200,000 sale is $10,000. For tiered plans, apply each rate only to the portion of sales that falls within its tier, then add the pieces together.

What are the common commission structures?

Straight commission (pay is 100% commission), base salary plus commission, tiered commission (higher rates after hitting thresholds), and draw against commission (an advance recovered from future commissions). Each shifts risk differently between employer and salesperson.

What is a draw against commission?

A draw is an advance paid in low-sales periods that is recouped from later commissions. A recoverable draw must be paid back from future earnings; a non-recoverable draw acts more like a guaranteed minimum for that period.

How are commissions taxed?

In the US, commissions are ordinary wage income, but as "supplemental wages" employers often withhold federal tax at a flat 22% when paid separately from salary. That is only withholding — your actual tax is settled at your normal rate when you file.

What is a typical commission rate?

Rates vary enormously by industry: real estate commissions have traditionally run about 5–6% of the sale price split between agents, retail sales often pay 5–15%, and SaaS sales commonly pay around 8–12% of contract value. Always evaluate the rate together with the base salary and quota.

Commission Calculator

Calculate sales commissions, fees, and commission-based earnings. Free, fast, accurate — no signup, mobile-friendly, wor

Commission Structure

Commission Type

Sales Amount ($)

Commission Rate (%)

🏢 Industry Examples

Commission Results

Total Earnings

$2,500

Effective rate: 5.00%

Gross Commission

$2,500

Before draw/deductions

Net Commission

$2,500

After draw/deductions

📋 Calculation Steps

1Sales Amount: $50,000

2Commission Rate: 5%

3Commission = $50,000 × 5% = $2500.00

How it works

A commission calculator finds earnings based on a percentage of sales. Multiply the sale amount by the commission rate. Tiered plans apply different rates above set thresholds, and a base salary is added on top of the commission.

Commission

Commission = sale amount × rate        Total pay = base + commission

sale amount: value of sales made
rate: commission percentage

Worked example

Sales = $40,000
Commission rate = 8%

Commission = 40,000 × 0.08

$3,200 in commission.

Good to know

Tiered plans pay a higher rate on sales above a threshold — check where each tier kicks in.
Some plans pay on gross sales, others on profit or net after returns.
Draws against commission are advances you must earn back before keeping further pay.

Commission Calculator

Commission Structure

🏢 Industry Examples

Commission Results

Total Earnings

Gross Commission

Net Commission

📋 Calculation Steps

How it works

Commission

Worked example

Good to know

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