Commission Calculator
Calculate sales commission based on total sales and commission rate. This commission calculator helps estimate earnings for sales professionals, freelancers, and business owners.
Sales Details
Commission Earned
Enter sales and rate to calculate commission.
How Commission Is Calculated
Sales commission is straightforward: multiply total sales by the commission rate. A rep who closes $50,000 in sales at a 5% commission rate earns $2,500. Most employers pay commission monthly or quarterly, either as a standalone payment or on top of a base salary.
The formula is: Commission = Total Sales × (Rate ÷ 100). Some structures use tiered rates — for example, 4% on the first $20,000 and 6% on everything above — which requires calculating each tier separately and summing the results.
Common Commission Structures
Commission plans vary by industry. Straight commission means all pay comes from sales — high earning potential, high risk. Base plus commission provides a guaranteed salary with commission added on top, which is most common in B2B sales. Draw against commission advances money each month that gets deducted from future commissions, giving reps income stability while keeping incentives tied to performance. Residual commission pays ongoing percentages as long as clients continue paying — common in insurance and SaaS.
Frequently Asked Questions
What is a typical commission rate for sales jobs?
Commission rates vary widely by industry. Real estate agents typically earn 2.5–3% of the sale price. Software sales reps often earn 8–12% of annual contract value. Retail and inside sales usually pay 2–5%. High-ticket sales like manufacturing equipment can pay 10–20% because each deal takes months to close. The rate reflects deal size, sales cycle length, and how much base salary is included.
How is commission income taxed?
Commission income is taxed as ordinary income, the same as a regular salary. If your employer pays commissions as a separate check, they may withhold at the IRS supplemental wage rate of 22%. If commission is included in your regular paycheck, it is withheld at your standard rate. Either way, the amount owed at tax time is the same — the withholding rate is just an estimate. Self-employed people earning commission must also pay self-employment tax (15.3%) on net earnings.
How do I calculate my effective hourly rate from commission?
Divide your total commission income by total hours worked. If you earned $3,000 in commissions this month and worked 160 hours, your effective rate is $18.75/hour. This is useful for evaluating whether a commission role pays competitively versus a salaried or hourly position. Track both your income and time over several months to get a reliable average, since commission income fluctuates with sales cycles.