How it’s calculated
A flat commission is a single percentage of sales. A tiered plan works like tax brackets: each rate applies only to the slice of sales inside its tier, so selling more never lowers the commission already earned.
Example (OpenStax Prealgebra): a 3% commission on a $260,000 house sale is 0.03 × 260,000 = $7,800. Tiered example with the defaults: on $50,000 of sales, 3% of the first 20,000 (600) + 5% of the next 20,000 (1,000) + 8% of the last 10,000 (800) = $2,400, an effective rate of 4.8%.
Some plans instead pay the higher rate on all sales once a target is hit ("retroactive" tiers); check your contract.
Frequently asked questions
Does the tier 3 rate apply to all my sales once I pass the threshold?
Not in this calculator. Each rate applies only to sales within its tier (a marginal or "stepped" plan). If your plan pays the top rate on everything, use the flat mode with that rate.
Is commission taxed differently?
In the U.S., commissions are wages and are subject to income tax withholding and payroll taxes like regular pay. Check with your employer or tax authority.
Embed this calculator
Add this free calculator to your own website. Copy the code below into your page’s HTML:
Sources
- Prealgebra 2e, 6.3 Solve Sales Tax, Commission, and Discount Applications — OpenStax
- Wages: Commissions — U.S. Department of Labor
Formulas are taken from the free public references above. Results are provided “as is” for informational and educational purposes only. See our disclaimer.
Spotted a mistake or missing option? Report a problem · GitHub issue· Suggest a calculator