Worked example
A rep closes $250,000.00 in the period. The plan pays 5% up to $100,000, 8% from $100,000 to $200,000 and 12% above $200,000.
| Tier | Revenue in tier | Rate | Commission |
|---|---|---|---|
| Tier 1 | $100,000.00 | 5% | $5,000.00 |
| Tier 2 | $100,000.00 | 8% | $8,000.00 |
| Tier 3 | $50,000.00 | 12% | $6,000.00 |
| Payout (marginal) | $19,000.00 |
Effective rate: $19,000.00 ÷ $250,000.00 = 7.6%. Paid retroactively, the same ladder pays every dollar at 12%: $30,000.00, which is $11,000.00 more. More hand-checked cases are listed in the methodology.
Inputs explained
- Revenue credited this period
- Commissionable revenue attributed to the rep after eligibility rules (bookings, collections or margin — whatever your plan measures). Enter a plain number.
- Tiers
- Contiguous bands starting at 0. Each tier includes its lower bound and excludes its upper bound. The last tier is open-ended. Thresholds can be revenue amounts or % of quota.
- Quota
- Required for % of quota tiers and accelerators. The calculator never guesses a quota.
- Accelerator
- A multiplier on the tier rate once attainment passes a threshold, applied to the increment above it or retroactively to all revenue.
- Cap and guaranteed minimum
- The cap limits gross commission for the period; the minimum tops the payout up after clawbacks. A cap below the minimum is rejected as contradictory.
- Split share
- The rep's share of credit on the revenue entered (for example 60% on a shared deal).
- Clawbacks
- Revenue reversed in this period (refunds, cancellations). It is recovered at the clawback rate you set — the calculator does not infer which deals are eligible.
Formula and order of operations
- Credit: revenue × split share.
- Tiers: marginal = Σ (revenue in tier × tier rate); retroactive = revenue × rate of the tier reached.
- Accelerator: + revenue above threshold × tier rate × (multiplier − 1).
- Cap: gross commission limited to the cap.
- Clawbacks: − clawed-back revenue × clawback rate.
- Minimum: payout raised to the guaranteed minimum if below it.
- Rounding: half-up to cents, once, on the payout. Intermediate values stay exact.
Every step appears as a line in the result, so the lines always add up to the payout.
Limitations
- One rep and one period at a time. To model a whole team, use the plan simulator.
- No currency conversion: all amounts must be in the plan currency.
- Draws, ramps, territory overrides and multi-period true-ups are not modelled yet.
- Estimates only — not legal, payroll or tax advice.
Frequently asked questions
How do you calculate sales commission?
Multiply the commissionable revenue credited to the rep by the commission rate. With tiers, either pay each slice of revenue at its own tier rate (marginal) or pay all revenue at the rate of the tier reached (retroactive). Then apply caps, clawbacks and any guaranteed minimum, in that order.
What is the difference between marginal and retroactive tiers?
Marginal (graduated) tiers pay each band of revenue at its own rate, like income tax brackets. Retroactive tiers pay every dollar at the rate of the highest tier reached. On the example above, the same ladder pays $19,000.00 marginally and $30,000.00 retroactively.
Is a tier boundary inclusive?
This calculator treats each tier as [from, to): the lower bound is included and the upper bound belongs to the next tier. Revenue of exactly $100,000 on a 0–100k / 100k+ ladder therefore falls in the second tier. Check how your own plan document defines it.
How are accelerators applied?
By default the accelerator multiplies the rate only on revenue above the threshold (for example above 100% of quota). You can switch to retroactive acceleration, where the higher rate applies to all revenue once the threshold is reached.
Does this calculator give payroll or legal advice?
No. Results are estimates based on the inputs you provide. Your compensation plan document, payroll rules and local law always take precedence.