Calculate sales commission earnings. Enter sales amount and commission rate with optional base salary, bonus and drawdown to find your exact net payout for any period.
Enter your total sales and commission rate. Optionally add base salary, bonus and any advance already paid to calculate your net payout.
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The basic formula is: Commission = Sales Amount x Commission Rate. Example: 80,000 dollars in sales at 5% commission = 4,000 dollars. Total earnings = base salary + commission + bonuses - any drawdown already paid. Many companies use tiered structures where the rate increases as sales thresholds are exceeded.
A draw (or drawdown) is an advance payment against future commission earnings. If a salesperson receives a 2,000 dollar monthly draw and earns 4,500 dollars in commission, they receive 2,500 dollars net. If commission falls below the draw amount, the deficit may be recovered from future commission (recoverable draw) or forgiven by the employer (non-recoverable draw).
Commission rates vary by industry: B2B SaaS typically pays 8-12% of annual contract value. Real estate agents earn 1-3% of property value. Insurance brokers earn 5-20% of premium. Retail sales staff rarely receive commission. Financial advisers may earn 0.5-1% of assets under management. Always evaluate total compensation (base plus on-target earnings) rather than commission rate alone.
OTE is the total expected annual compensation if a salesperson hits 100% of their sales quota — base salary plus full commission at target. A 30,000 dollar base plus 30,000 dollars commission at quota = 60,000 dollar OTE. Most companies see median attainment of 70-80%. When evaluating a sales role, mentally model 70-80% of the commission component as a more realistic expectation.
Tiered structures increase the rate as salespeople hit higher thresholds. Example: 3% on first 20,000 dollars, 5% on 20,001 to 50,000 dollars, 8% above 50,000 dollars. For 60,000 dollars total sales: Tier 1 = 600 dollars, Tier 2 = 1,500 dollars, Tier 3 = 800 dollars. Total = 2,900 dollars. Tiered structures incentivise high performance and are common in SaaS and enterprise sales.
In most countries, commission is taxed as regular earned income — the same rates apply as for salary. In the US, a flat 22% supplemental withholding rate may apply to commission payments. If your annual income varies significantly due to commission, you may owe additional tax at year-end — set aside 25-35% of large commission payments for tax planning purposes.
A claw-back provision allows an employer to recover commission if a sale is later cancelled or the customer churns within a specified period — commonly 90-180 days. Claw-backs protect companies from salespeople closing low-quality deals for short-term commission. Always review the claw-back policy carefully when evaluating a sales compensation plan.
Gross commission is calculated on the full invoice value before any deductions. Net commission is calculated after deducting returns, discounts or other adjustments. The difference can be significant if your deals involve large discounts or if customers frequently return goods. Always clarify which calculation basis applies in your commission plan to avoid surprises at payout.
