Commission Calculator
Calculate flat or tiered sales commission, with splits and base salary.
Inputs
Leave 0 for commission-only. Added to commission for total compensation.
100% if you keep it all. Lower if you split with a partner or broker.
Your Commission
$2,500.00
Gross Commission
$2,500.00
Before the split is applied.
Total Compensation
$2,500.00
Commission + base salary.
Effective Rate on Sales
5.00%
Your commission as a percentage of total sales.
Base Salary
$0.00
Step by step
Gross commission
$50,000 × 5.0%
= $2,500.00
How it works
A flat commission applies one rate to all sales. Tiered commission applies different rates to successive bands of sales revenue — similar to a progressive tax. The rate on each band is a marginal rate: only the sales within that tier are charged at that tier's rate. Your net commission depends on your split arrangement; if you share commissions with a co-agent or broker, the gross amount is divided accordingly before adding any base salary.
Formulas
Flat commission
Commission = Sales × Rate
- S
- Total sales amount
- r
- Commission rate (decimal)
Tiered commission
Commission = Σ (sales in each tier × that tier's rate)
- l_i
- Lower bound of tier i
- u_i
- Upper bound of tier i
- r_i
- Rate for tier i
Frequently Asked Questions
What is a tiered commission structure?
Tiered (or 'bracketed') commission applies progressively higher rates as sales increase. For example, 3% on the first $25k, 5% on $25k–$75k, and 8% above $75k. Only the sales within each tier are charged at that tier's rate — the higher rate does not apply retroactively to all sales. This incentivizes reps to exceed targets.
How does a commission split work?
A split divides the gross commission between two or more parties. A 60/40 split on a $5,000 commission gives $3,000 to one party and $2,000 to the other. Real estate transactions commonly split commissions between the buyer's agent and seller's agent, and again between agents and their brokerages.
Is the effective rate the same as my commission rate?
For flat commissions, yes. For tiered commissions, the effective rate (your total commission ÷ total sales) is always lower than your top tier rate, because only part of your sales reached that tier. The effective rate is useful for comparing total compensation across different structures.
How is commission taxed?
Commission is ordinary income and taxed like a salary. If you receive a large commission as a lump sum, your employer may withhold at a supplemental rate (22% federal for amounts under $1M). Your actual tax depends on your total income and filing situation — consult a tax advisor for specifics.