How to use the sales commission calculator
- Pick a Plan type: Flat rate, Quota with accelerator or Tiered rates.
- Enter Sales in the period ($) and Base salary for the period ($). Leave the base blank for commission-only pay.
- Fill in the fields that appear: Commission rate (%) for a flat plan, Quota ($) with Rate up to quota (%) and Rate above quota (%) for a quota plan, or Tier 1 cap ($), Tier 2 cap ($) and the three tier rates for a tiered plan.
- For quota and tiered plans, choose How higher rates apply: only to the sales inside each band, or to all sales once a band is reached.
How commission is calculated
Flat: commission = sales × rate. Quota, banded: (sales up to quota × rate up to quota) + (sales above quota × rate above quota). Tiered, banded: each tier's rate applies only to the sales inside that tier, like tax brackets. With To all sales once reached, the rate of the highest band reached is paid on every dollar, the retroactive accelerator described in QuotaPath's guide to accelerators. Total pay = base salary + commission. On-target earnings (OTE) are base pay plus the commission expected at quota, as Wikipedia's commission article defines them. Sales exactly at a quota or cap stay in the lower band. Each band is rounded to the cent.
Worked example
The calculator opens on a flat plan with $120,000 of sales, a $4,000 base and a 10% rate. Commission = 120,000 × 10% = $12,000.00, total pay is $16,000.00 and the effective rate is 10.00%. Switch to the quota plan with its starting values ($100,000 quota, 8% up to quota, 14% above) and the same sales earn $8,000 + $2,800 = $10,800.00, a 9.00% effective rate. The tiered plan's starting values give $2,500 + $5,000 + $3,000 = $10,500.00, or 8.75%.
Limits to know about
- It models one period. Keep sales, quota, tier caps and base salary on the same period.
- Draws, clawbacks, commission caps, split credit and per-deal tiers are not modeled.
- Retroactive plans create cliffs: one more dollar of sales can raise pay by thousands. The calculator flags when you are within $1,000 of the next band.
- Results are before tax. The paycheck calculator estimates take-home pay.
To turn revenue into gross profit for a margin-based plan, use the profit margin calculator. To convert a base salary to an hourly wage, try the hourly to salary calculator.
Sales commission FAQ
How do you calculate sales commission?
Multiply the sales your plan pays on by the commission rate. On a flat 10% plan, $120,000 of sales earns $12,000. Tiered and quota plans split sales into bands, apply each band's rate to the sales inside it and add the results. Add any base salary for total pay.
What is a commission accelerator?
An accelerator is a higher rate that starts once sales pass a threshold, usually quota. A non-retroactive one pays the higher rate only on sales above the threshold. A retroactive one pays it on all sales in the period, so pay jumps at the threshold. The calculator offers both under How higher rates apply.
What is OTE in sales?
On-target earnings (OTE) are base pay plus the commission a rep is expected to earn at 100% of quota. A $4,000 monthly base plus $8,000 of commission at quota gives an OTE of $12,000 a month.
How is commission taxed?
Commission is taxed as wages. Under IRS Publication 15 for 2026, an employer that pays commission separately from regular wages may withhold a flat 22% federal income tax, or 37% on supplemental wages above $1 million in a year. Social Security, Medicare and state taxes apply on top, and withholding is not your final tax.
Should commission be paid on revenue or gross profit?
Both are used. Revenue plans are simple and reward volume. Gross profit plans protect margin, because discounting a deal also cuts the rep's pay. To model a profit plan here, enter gross profit in the Sales field.
Sources: IRS Publication 15 (2026), section 7; Wikipedia, Commission (remuneration); QuotaPath, commission with accelerators. Estimates only, not payroll, tax or legal advice.