Commission Pay Calculator
Calculate your earnings from commission-based pay, a variable compensation where you earn a percentage of the sales or deals you generate.
Quick Use Samples
Commission Setup
Commission Results
Your estimated total compensation is $56,000, which includes your $50,000 base salary and $6,000 in net commission. You exceeded your sales target by 20.0%. This results in an effective commission rate of 5.00% on your $120,000 of sales.
Performance Metrics
Commission Insights
- • Target commission: $5,000
- • Commission vs target: +20.0%
- • Exceeded sales target by 20.0%
Earnings Breakdown
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What is Commission Pay?
Commission pay is a form of variable compensation where an employee earns a percentage of the value of the sales or deals they generate. It's common in roles like real estate, sales, and recruitment. It can be paid on top of a base salary (retainer) or as the sole form of income (commission-only).
Behind the Formula
The calculator applies a commission rate to a sales figure. The formula can be a simple percentage (e.g., 2% of total sales), or a tiered structure where the percentage increases as sales targets are met (e.g., 2% on the first $100k, 3% on the next $100k). It can also factor in a base salary and a draw, which is an advance on future commission earnings.
Expert Insights
- Commission structures in Australia must still ensure an employee earns at least the minimum wage under the relevant Modern Award. Commission-only arrangements are only legal in specific circumstances and industries, like real estate.
- Understand your commission's 'trigger point'. Is it paid when a contract is signed, when the invoice is paid, or when the project is completed? This timing can significantly impact your cash flow.
- A 'commission draw' isn't free money. It's an advance that you must pay back from your future commission earnings. If you leave the job with a negative draw balance, you may have to repay it.
Actionable Tips
- Negotiate your commission structure carefully. A lower base salary might be acceptable if it comes with a higher, uncapped commission rate in a high-performing territory.
- Budget for income volatility. Commission earnings can be inconsistent, so it's wise to base your regular living expenses on your base salary and use commission for savings, investments, or large purchases.
- Always get your commission agreement in writing. The document should clearly state the commission rate, payment schedule, and what happens to pending commissions if you leave the company.
Real-World Examples
Real Estate Agent
An agent sells a house for $800,000. Their agency has a tiered commission: 2% on the first $500,000 and 2.5% on the remainder. Their commission is ($500,000 * 0.02) + ($300,000 * 0.025) = $10,000 + $7,500 = $17,500.
Software Salesperson
A salesperson has a base salary of $70,000 and earns 10% commission on all software contracts sold. In one quarter, they sell $150,000 worth of contracts, earning $15,000 in commission on top of their quarterly salary.
Recruitment Consultant with a Draw
A consultant has a $2,000 monthly draw. In their first month, they only earn $1,500 in commission. They are paid $2,000, but have a negative balance of $500 to be paid back from future earnings. The next month, they earn $4,000 commission, so they receive $3,500 ($4,000 minus the $500 deficit).
Glossary of Terms
Retainer
A base salary that is paid to a commission-based employee regardless of their sales performance.
Draw Against Commission
An advance payment made to a salesperson that is deducted from their future commission earnings.
Tiered Commission
A commission structure where the percentage rate increases as the salesperson reaches higher levels of sales.