Commission Calculator
Sales Details
Total value of goods sold.
Percentage you earn.
Fixed pay regardless of sales.
Total Earnings
Base Salary + Commission
Understanding Sales Commission
For millions of professionals in real estate, automotive sales, retail, and tech, commission is a vital part of their paycheck. Unlike a fixed salary, commission is performance-based pay—the more you sell, the more you earn.
Our **Commission Calculator** is designed to help you instantly estimate your take-home earnings based on your sales performance. Whether you are negotiating a new job offer or planning your monthly budget, knowing your potential payout is essential.
Common Commission Structures
Not all commission plans are created equal. Here are the three most common structures you will encounter:
1. Straight Commission
You earn a percentage of sales and nothing else. There is no base salary. This is common in real estate and independent sales roles. It offers the highest potential reward but the highest risk.
2. Base Salary + Commission
You receive a fixed salary (base) plus a percentage of sales. This provides financial stability while still incentivizing performance. Most corporate sales jobs follow this model.
3. Tiered Commission
Your commission rate increases as you sell more. For example, you might earn 5% on the first $10,000, but 7% on anything above that. This structure rewards top performers aggressively.
How to Calculate Commission
The math is straightforward:
For example, if you sell a car for $30,000 and your commission rate is 25% of the gross profit (let's say profit is $2,000), you would calculate $2,000 × 0.25 = $500.
Note: Be careful to check if your commission is based on Revenue (total price) or Gross Margin (profit).
Gross vs. Net Commission
In some industries, your commission is calculated after certain costs are deducted.
- Real Estate: An agent might split their 3% commission with their brokerage (e.g., 70/30 split).
- Retail: Commission might only apply to items sold at full price, not discounted items.
Negotiating Your Commission Rate
If you are starting a new sales role, the commission rate is often negotiable. Here are tips to get a better deal:
- Ask for a "Draw": A draw against commission ensures you get a minimum paycheck every month, even if sales are slow. You pay it back from future commissions.
- Request Accelerators: If the base rate is fixed, ask for bonuses when you hit 110% or 120% of your quota.
- Clarify the "Clawback" Policy: Understand what happens if a customer cancels their order or returns the product. Will you have to pay the commission back?
Frequently Asked Questions
Are commissions taxed differently?
Yes. The IRS considers commissions "supplemental wages." They are often withheld at a flat 22% rate, or added to your regular income and taxed at your marginal bracket. This can make your tax bill look different than a salaried employee's.
What is OTE (On-Target Earnings)?
OTE is the total amount you can expect to earn if you hit 100% of your sales quota. It includes your Base Salary + Expected Commission. It is the "sticker price" of a sales job offer.
Can I earn commission on top of overtime?
Generally, yes. Total earnings typically include base, overtime, and any commissions/bonuses earned during the period.