Sales Commission Calculator
Calculate sales commissions using multiple structures including revenue-based, profit-based, threshold, and tiered commission plans
Calculate Sales Commission
Total revenue from sales
Direct costs of goods sold
Cost of labor for production
Overhead and operational expenses
Fixed annual base compensation
Percentage rate for commission calculation
Commission Results
Commission Analysis
Example Calculation
Revenue Commission Example
Gross Sales: $100,000
Commission Rate: 5%
Commission: $100,000 × 5% = $5,000
Base Salary: $50,000
Total Earnings: $50,000 + $5,000 = $55,000
Tiered Commission Example
Sales: $120,000
Tier 1: $50,000 × 3% = $1,500
Tier 2: $50,000 × 5% = $2,500
Tier 3: $20,000 × 7% = $1,400
Total Commission: $5,400
Commission Types
Revenue
% of total sales
Simple and easy to track
Profit
% of profit margin
Encourages profitable sales
Threshold
Above minimum target
Motivates baseline performance
Tiered
Escalating rates
Rewards high performance
Commission Tips
Align commission structure with business goals
Consider both revenue and profitability
Use thresholds to ensure minimum performance
Tiered structures motivate overachievement
Regular review and adjustment is important
Understanding Sales Commission Structures
Commission Types Explained
Revenue Commission
The simplest form where commission is calculated as a percentage of total sales revenue. Easy to understand and implement but doesn't account for profitability.
Profit Commission
Commission based on actual profit generated, encouraging sales reps to focus on profitable deals rather than just volume. Aligns sales behavior with company profitability.
Threshold Commission
Commission is only earned on sales exceeding a minimum threshold. Ensures sales reps meet baseline expectations before earning commissions.
Advanced Structures
Margin Target Commission
Commission is earned only when profit margins exceed specific targets. Encourages value-based selling and protects company margins.
Tiered Commission
Commission rates increase at different sales levels, providing escalating rewards for higher performance. Motivates sales reps to exceed targets.
OTE (On Target Earnings)
The total expected compensation (base salary + commission) when achieving 100% of sales target. Helps in recruitment and performance planning.