Commission Tier Earnings Calculator

How to calculate tiered commission?

Tiered commission rewards higher performance by applying increasing percentage rates to sequential portions of total sales.

Formula: Commission = (Tier 1 Portion × Rate 1) + (Tier 2 Portion × Rate 2) + ...

Using the Commission Calculator: an example

Scenario: $25,000 Total Sales, Tier 1 limit of $10,000 at 5%, Tier 2 limit of $20,000 at 10%, and Tier 3 at 15%.

Step-by-step calculation:

1. Calculate 5% of first $10k ($500)
2. Calculate 10% of next $10k ($1,000)
3. Calculate 15% of remaining $5k ($750)
4. Sum for total ($2,250)

Frequently Asked Questions

What is a marginal commission rate?

It is the percentage earned on the very last dollar of sales within a specific tier.

What is an effective commission rate?

The effective rate is your total commission divided by your total sales volume, representing your average earnings percentage.