How this Commission Calculator works

Commission Calculator helps you estimate how much you’ll earn from sales commissions under different pay structures — and how close you are to the next tier. It’s built for founders, sales reps, creators, affiliates, agencies, and anyone paid on performance.

Most commission confusion comes from mixing four ideas:

• What gets paid: revenue, profit, margin dollars, or a fixed amount per sale.
• How it’s paid: a flat rate, a tiered/accelerator plan, or bonuses.
• When it’s paid: on booking, on cash collected, or after a return window (clawbacks).
• Who shares it: splits between SDR/AE/partner, team pools, or house accounts.

This calculator makes those pieces explicit. You choose a commission model (percentage, fixed, or tiered), enter your sales activity and deal economics, and get an estimated commission for the period (monthly or annual). Then you can set a target commission and see how many deals (or how much revenue) you need to hit it.

• Gross commission: the commission before clawbacks and splits.
• Net commission: after expected clawbacks and splits.
• Effective commission rate: net commission ÷ revenue (or ÷ margin if you choose margin-based payout).
• Next-tier impact: how much more you’d earn if you cross the next threshold.

This is an estimation tool. Real comp plans vary (draws, caps, spiffs, retroactive accelerators, multi-product rates). Use it for planning, negotiation, and quick “what-if” scenarios — not payroll.

Formula breakdown (plain English)

We compute commission in three layers: sales value → plan payout → adjustments.

First we calculate your period revenue (or margin dollars) from activity:

• Deals closed = Leads × Conversion rate
• Revenue = Deals closed × Average deal value
• Margin dollars (optional) = Revenue × Gross margin %

If you already know your period revenue, you can type it directly and skip the activity math. But the activity inputs are useful because they show levers: improving conversion rate or deal size changes commission even if the plan stays the same.

Then we apply one of three common models:

• Percentage of revenue: Commission = Revenue × Rate
• Fixed per sale: Commission = Deals × Payout per deal
• Tiered / accelerator: Different rates apply to different revenue bands (example: 5% up to $20k, 8% on the next $30k, 10% above $50k). We compute the commission per band and add them up.

Finally we estimate real-world reductions:

• Split %: If you keep 70% and the rest goes to an SDR, partner, or team pool, Net = Gross × Split%
• Clawback %: If 3% of revenue is refunded/returned and commissions are reversed, we reduce by that amount: Net = Net × (1 − Clawback%)
• Bonuses: We add a fixed bonus (spiff, kickers, quota bonus) to the final payout

Worked examples

Example A: Flat commission rate. You close 12 deals in a month. Average deal size is $2,000. Revenue is 12 × $2,000 = $24,000. Your commission rate is 7%.

• Gross commission = $24,000 × 0.07 = $1,680
• If you split 80/20 (you keep 80%), and expect 2% clawbacks:
• Net commission = $1,680 × 0.80 × (1 − 0.02) = $1,317 (rounded)

Example B: Fixed payout per sale. You’re an affiliate or referral partner earning $45 per conversion. You drive 320 conversions in a month.

• Gross commission = 320 × $45 = $14,400
• If 5% refunds occur (clawback), Net ≈ $14,400 × (1 − 0.05) = $13,680

Example C: Tiered accelerator. Your plan pays:

• 5% on the first $20,000
• 8% on the next $30,000 (from $20,000 to $50,000)
• 10% on revenue above $50,000

If you generate $72,000 in a quarter:

• $20,000 × 5% = $1,000
• $30,000 × 8% = $2,400
• $22,000 × 10% = $2,200
• Total gross commission = $5,600

How to use it (fast)

1. Pick Monthly or Annual.
2. Choose your commission model (percentage, fixed, or tiered).
3. Either (a) enter your expected revenue directly, or (b) enter leads, conversion rate, and deal value.
4. Adjust split %, clawback %, and bonus.
5. Set a target commission to see what activity/revenue you need to hit it.

Why this calculator can boost income

Commission is “math with emotions.” Small improvements in the right lever can create outsized pay changes — especially in tiered plans. Use the calculator to test three high-leverage moves:

• Increase deal size (bundles, annual prepay, upsells) — affects every deal.
• Improve conversion rate (better qualification, better follow-up) — affects deal count.
• Cross the next tier (timing, pull-forward deals) — changes the rate itself.

If you’re negotiating comp, plug in the current plan, then test a +1% rate or a slightly lower clawback, and compare the yearly impact. Seeing it as a number makes negotiation calmer and more precise.

Common plan types, pitfalls & FAQs

Commission plan types (quick guide)

Revenue-based % is common in SaaS and agencies. It scales with deal size, but can encourage discounting unless you pay on cash collected or margin.

Margin-based % pays on gross profit dollars (Revenue × Gross margin). It rewards profitable deals and discourages “bad revenue.”

Fixed payout per conversion is popular in affiliate and lead-gen programs. It’s simple, but assumes conversions have similar value.

Tiered accelerators increase the rate after you pass thresholds. This calculator uses a banded approach (each tier rate applies only to revenue inside that tier), which is the most common and easiest to audit.

Common pitfalls (avoid these)

• Bookings vs. cash collected: if you’re paid when cash arrives, enter revenue that’s actually collected in the period.
• Ignoring clawbacks: refunds/returns/cancellations can reduce take-home pay — model a realistic %.
• Forgetting splits: role splits (SDR/AE/partner) can meaningfully change the effective rate.
• Over-optimistic conversion: run conservative, expected, and optimistic scenarios.

A simple 3-scenario workflow

1. Expected: your normal deal flow.
2. Bad: conversion −20% and clawbacks +2 points.
3. Great: deal size +10% and revenue just over the next tier.

Compare net commission across scenarios. If “great” is dramatically higher than “expected,” your plan is tier-sensitive — timing and deal management matter.

FAQ

• Is this only for W‑2 sales reps?

  No. It works for affiliates, agencies, recruiters, brokers, creators, and contractors — anyone paid on performance.

• Commission rate vs. effective rate — what’s the difference?

  Your plan’s rate is the headline number. Effective rate is what you actually keep after splits and clawbacks. Effective rate is the planning number.

• Do tiered plans apply the higher rate to all revenue?

  Some do (retroactive), some don’t (banded). This calculator uses banded tiers by default. If your plan is retroactive, treat results as a conservative baseline and compare scenarios around the threshold.

• Can I use it for subscriptions (ACV/TCV)?

  Yes. Enter the amount your plan pays on: first-month revenue, ACV, TCV, or collected cash for the period.

• Do you store my inputs?

  No. Everything runs in your browser. If you press “Save,” we store only a local snapshot on this device so you can track changes over time.

Tip: After calculating, hit “Copy” to share a clean summary + link in Slack or email.

Want more accuracy?

If your plan is complex (draws, caps, retroactive tiers, multi-product rates), treat this output as your “clean baseline.” Then layer the plan rules on top. For negotiation, baseline math is often enough to compare offers and quantify small rate changes.

• Use the CAC Calculator and LTV Calculator to ensure commissions fit the business model.
• Use Marketing ROI to compare paid channels vs. affiliate payouts.
• Use Unit Economics to see the full contribution margin after commission.