How it works
A flat commission pays one rate on every dollar sold. A tiered (graduated) plan pays a higher rate only on the sales within each higher band, like tax brackets, which rewards reps for exceeding targets.
In the default example, the first $50,000 earns 4%, the next $50,000 earns 6%, and everything above $100,000 earns 8%.
Some plans instead apply the top rate retroactively to all sales once a threshold is reached. That pays more and is not what this calculator models.
Formula
Flat: Commission = Sales × Rate. Tiered: Commission = Σ (sales within each band × that band's rate).
Questions people ask
What is a typical sales commission rate?
Rates range widely: roughly 2–5% for high-volume products, 5–15% for many B2B sales, and 20% or more for some software and services where reps are paid largely on commission.
Is commission calculated on revenue or profit?
Most plans pay on revenue (bookings or collected sales). Some, especially in distribution and auto sales, pay on gross profit to discourage discounting.
How is commission taxed?
In the US, commissions are supplemental wages. Employers often withhold federal income tax at a flat 22%, plus Social Security and Medicare, though your actual tax is settled on your return.