How commission is calculated
Example: $50,000 of sales at 5% earns $2,500 of commission. With $2,000 base pay, total pay for the period is $4,500.
Working backward: to earn $6,000 with the same base and rate, you need ($6,000 − $2,000) ÷ 5% = $80,000 of sales. With a 10% rate on sales above a $50,000 quota, you'd need only $65,000: $2,500 on the first $50,000 plus $1,500 on the next $15,000.
Common commission structures
Straight commission pays only a share of sales; base plus commission adds a steady salary; tiered plans raise the rate once you pass a quota. Some plans pay a percentage of gross profit instead of sales, which you can model by entering profit as "sales". Real estate commission is usually 5% to 6% of the price, split between the buyer's and seller's agents and their brokerages, so each agent typically keeps 1.25% to 3% of the price.
Commission is taxed as regular income. Employers often withhold it at the 22% flat rate for supplemental wages; the bonus tax calculator shows what that leaves.
Frequently asked questions
How do you calculate commission?
Multiply the sales by the commission rate. 6% of $12,000 is $720.
What is a typical sales commission rate?
It varies widely: 2% to 5% is common for high-priced goods, 5% to 10% for many B2B and retail roles, and 20% to 30% or more in some software and service sales where there's little or no base pay.
How is real estate commission split?
The total, often 5% to 6% of the sale price, is usually divided between the buyer's and seller's brokerages, and each brokerage then shares its part with the agent.
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