Free tool
Commission calculator
Calculate commission with a flat rate, tiers, an accelerator or gross margin. Enter sales, quota and rates, and see the commission, the effective rate and total pay for the period.
How the calculator works
Four ways to calculate commission
Commission is always a base multiplied by a rate. The models differ in what the base is and whether the rate changes along the way. The examples use the calculator’s default figures: DKK 420,000 in sales in a month and a quota of DKK 350,000.
Flat rate
Commission = sales × rate
The same rate on every krone. At 8% of DKK 420,000 the commission is DKK 33,600. The effective rate always equals the agreed rate, so the model is easy to explain and to check.
Read more about flat-rate commissionTiered
Commission = sum of (sales inside the tier × the tier’s rate)
Each tier has its own rate, and the rate applies only to the part of sales inside the tier. With 5% up to DKK 200,000, 8% from DKK 200,000 to 350,000 and 12% above that, DKK 420,000 gives 10,000 + 12,000 + 8,400 = DKK 30,400. The effective rate is 7.2%.
Read more about tiered commissionAccelerator
Commission = sales up to quota × base rate + sales above quota × higher rate
The rate goes up once sales pass the quota. With 8% up to a quota of DKK 350,000 and 15% above it: 28,000 + 10,500 = DKK 38,500. If the higher rate applies retroactively, the rep gets 15% of all sales as soon as the quota is reached: DKK 63,000. That creates a big jump right at the quota.
Read more about acceleratorsGross margin
Commission = sales × gross margin % × rate
Commission is calculated on what the sale earns, not on revenue. At a 35% gross margin the margin is DKK 147,000, and 20% of that is DKK 29,400. That gives the rep a direct interest in keeping discounts down.
Read more about margin-based commissionHow to use the calculator
- Choose a commission model at the top: flat rate, tiered, accelerator or gross margin.
- Choose a period: month, quarter or year. Sales, quota and cap apply to the period you choose.
- Enter sales and quota for the period. You can type 1,250,000 or 1250000.
- Fill in the rates for the model. Use a decimal point for decimals, for example 2.5.
- Add base salary and a cap if you want to see total pay, or if your plan has a cap.
- Read off the commission, the effective rate, quota attainment and the step-by-step calculation.
Base salary per month is multiplied by the number of months in the period and added to the commission in Total pay. A cap limits the commission for the period, and the calculator shows how much the cap cuts off.
If you first need to set how large variable pay should be at quota, start with the OTE calculator. More formulas and worked examples are in the guide Commission formula: how to calculate commission.
Frequently asked questions
How do you calculate commission?
Multiply the commission base by the rate. The base is usually revenue or gross margin in a period, for example a month. If a rep sells DKK 420,000 at a flat rate of 8%, the commission is 420,000 × 0.08 = DKK 33,600. With tiers or an accelerator you calculate each part of sales separately and add them up.
What is a normal commission rate?
There is no rate that fits everyone. It depends on whether it is calculated on revenue or gross margin, how much of pay is variable, and how large the deals are. A rate on gross margin has to be higher than a rate on revenue to give the same commission, because the base is smaller. Start with variable pay at 100% of quota and divide it by the quota. The OTE calculator works this out for you.
What is the difference between tiered commission and an accelerator?
In a tiered plan the tiers are fixed amounts, for example DKK 0–200,000 and 200,000–350,000, and each tier has its own rate. An accelerator is tied to the rep’s quota: the rate goes up once sales pass the quota. Both can be calculated marginally, where the higher rate applies only to sales above the threshold, or retroactively, where it applies to all sales.
Is commission calculated on revenue or gross margin?
Both are used. Commission on revenue is simple to explain and can be calculated straight from CRM data. Commission on gross margin needs cost prices, but it rewards sales that make money and makes discounts more expensive for the rep. If your products have varying margins, for example in wholesale, gross margin is often the fairest base.
What does a commission cap do?
A cap sets an upper limit on how much commission is paid out in a period. It protects the company against unexpectedly large payouts, but it can also lead reps to push deals into the next period once the cap is reached. The calculator shows how much the cap cuts off, so you can see what it costs the rep.
Stop calculating commission in spreadsheets
Prowi pulls sales from your CRM and calculates commission automatically for every rep and every deal, using the rules you have agreed. Reps can follow along themselves.