The Commission Calculator can compute any one of the following, given inputs for the remaining two: sales price, commission rate, or commission for a simple percentage commission.
| Sales price | $3,500.00 |
| Commission rate | 6.00% |
| Commission | $210.00 |
A commission is pay that depends on how much a salesperson sells. Instead of, or on top of, a fixed salary, the seller receives a share of the revenue they bring in. Real estate agents, car dealers, insurance brokers, recruiters and many retail and online sellers earn this way.
In its simplest form the commission is a fixed percentage of the sale: Commission = Sales price × Rate ÷ 100. A 6% commission on a $3,500 sale is 3,500 × 0.06 = $210.
Leave one box blank and fill the other two. Rate = Commission ÷ Sales price × 100, so $210 earned on a $3,500 sale is a 6% rate. Sales price = Commission ÷ (Rate ÷ 100), so to earn $1,000 at 4% you need to sell $25,000.
Straight commission pays only a percentage of sales. Base plus commission adds a fixed salary, which lowers risk for the employee. Tiered commission raises the rate as sales pass set levels, for example 3% on the first $20,000 and 5% on anything above it, which rewards top performers.
Some plans use a draw against commission (an advance that is paid back from future commissions), residual commission (repeat payments while a customer keeps paying) or gross-margin commission (a share of profit rather than revenue, so discounts reduce the payout).
Suppose sales of $50,000 with 3% up to $20,000 and 5% above. First tier: 20,000 × 0.03 = $600. Second tier: 30,000 × 0.05 = $1,500. Total commission = $2,100, an effective rate of 4.2%.
In home sales the total commission, often 5% to 6% in the United States, is usually split between the buyer's and seller's agents and then again with each agent's brokerage. On a $400,000 home a 6% total is $24,000, but the individual agent may keep only a quarter of that.
Is commission taxed? Yes, it is ordinary income and is often withheld at a flat supplemental rate.
Is a higher rate always better? Not if it applies to a smaller base or comes without a salary; compare expected yearly earnings.
Can commission be negotiated? Often, especially in real estate and recruitment.