Worked example
A rep with $60,000 of variable pay at target and an $800,000 annual quota. The plan rate that pays exactly the variable at 100% of quota is shown below.
| Input | Value |
|---|---|
| What do you want to find? | Plan rate: variable target ÷ quota |
| Variable (target incentive) pay | $60,000.00 |
| Annual quota | $800,000.00 |
| Commission earned | $4,500.00 |
| Sale amount | $50,000.00 |
| Commission rate | 8% |
| Result | Value |
|---|---|
| Commission rate | 7.5% |
| Commission | $60,000.00 |
| Base the rate applies to | $800,000.00 |
- Variable pay at 100% of quota: $60,000.00
- ÷ Quota: $800,000.00
- = Plan commission rate: 7.5%
The three formulas
Plan rate = variable pay at target ÷ quota
Effective rate = commission earned ÷ sale amount
Commission = commission rate × sale amount
The plan rate is a design number: it is the flat rate that makes a rep who lands exactly on quota earn exactly their variable pay. The effective rate is an observed number: what was actually paid, divided by what was actually sold. On a plan with tiers, accelerators or caps the two drift apart, and the gap tells you how much the plan mechanics are adding or removing.
How to use each mode
- Plan rate — enter the annual variable pay at target (OTE minus base salary) and the annual quota. Use the same period for both.
- Effective rate — enter one deal (or a period total) and the commission it generated, including any accelerator or SPIFF you want to count.
- Commission amount — enter a rate and a sale amount to see the payout of a single flat-rate deal.
Need the variable pay itself? Start with the OTE calculator. For tiered plans with several deals, the commission calculator applies each tier in turn.
What this calculator does not do
- It assumes a single flat rate. Tiers, accelerators and caps change the payout curve; see the accelerator calculator and the commission cap calculator.
- It does not judge whether a rate is high or low. We do not publish rate benchmarks because we have no sourced data to back them.
- Results are rounded to six decimal places of a fraction (0.0001%), which is more precision than any payroll system needs.
Frequently asked questions
How do I calculate a commission rate from quota?
Divide the variable pay a rep should earn at 100% of quota by the quota. A $60,000 variable on an $800,000 quota gives 60,000 ÷ 800,000 = 7.5%.
Why is my effective rate different from my plan rate?
Because the plan is not flat. Accelerators push the effective rate up above quota, caps and decelerators push it down, and splits or clawbacks change the commission without changing the sale amount.
Should the rate be based on revenue, bookings or margin?
That is a plan-design choice, and the formula is the same — only the base changes. If you pay on margin, the [gross margin commission calculator](route:grossMarginCommissionCalculator) converts a margin rate into its revenue equivalent.
Can a commission rate be above 100%?
Mathematically yes, if the commission is larger than the base it is measured against, but it almost always signals a data-entry mistake such as mixing monthly and annual figures.