Plot No. 77 · Business & Work
Sales Commission Calculator
Work out commission earnings from a base salary, total sales, a commission rate and a quota that commission only applies above. It shows the commission itself, total earnings and the effective commission rate across all your sales, not just the amount above quota.
Commission applies only to sales above the quota. Set the quota to zero for a straight percentage of every sale.
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Commission by sales volume and rate
With no quota in the way, commission is one multiplication: sales times the rate. The table below is that sum worked out across the volumes and rates most plans use, so you can read a figure off directly rather than reaching for a calculator. Every cell assumes commission applies to the full amount, which is the structure used by plans that pay little or no base salary. If your plan has a quota, the next table shows what it takes out.
| Total sales | 2% | 3% | 5% | 8% | 10% | 15% | 20% |
|---|---|---|---|---|---|---|---|
| £25,000 | £500 | £750 | £1,250 | £2,000 | £2,500 | £3,750 | £5,000 |
| £50,000 | £1,000 | £1,500 | £2,500 | £4,000 | £5,000 | £7,500 | £10,000 |
| £100,000 | £2,000 | £3,000 | £5,000 | £8,000 | £10,000 | £15,000 | £20,000 |
| £150,000 | £3,000 | £4,500 | £7,500 | £12,000 | £15,000 | £22,500 | £30,000 |
| £250,000 | £5,000 | £7,500 | £12,500 | £20,000 | £25,000 | £37,500 | £50,000 |
| £500,000 | £10,000 | £15,000 | £25,000 | £40,000 | £50,000 | £75,000 | £100,000 |
| £1,000,000 | £20,000 | £30,000 | £50,000 | £80,000 | £100,000 | £150,000 | £200,000 |
There is no standard commission rate, and a rate on its own tells you nothing. It only means something read together with the base salary behind it and the quota in front of it. Plans paying no base often sit in the 10 to 20 percent columns; plans paying a full salary usually sit in the 3 to 10 percent range. To turn a total earnings figure into take-home pay after tax and National Insurance, the salary take-home calculator runs the PAYE bands.
What the quota takes out
A quota is a threshold that commission only applies above. It does not change the headline rate, it changes how much of your sales that rate is allowed to touch. Every row below is the same £250,000 of sales at the same 8 percent, and the only thing moving is the quota. The effective rate in the last column is the number worth comparing between two job offers: it is the commission divided by all your sales, so it answers what the plan really pays per pound sold.
| Quota | Commissionable sales | Headline rate | Commission | Effective rate |
|---|---|---|---|---|
| £0 | £250,000 | 8% | £20,000 | 8% |
| £50,000 | £200,000 | 8% | £16,000 | 6.4% |
| £100,000 | £150,000 | 8% | £12,000 | 4.8% |
| £150,000 | £100,000 | 8% | £8,000 | 3.2% |
| £200,000 | £50,000 | 8% | £4,000 | 1.6% |
| £240,000 | £10,000 | 8% | £800 | 0.32% |
| £250,000 | £0 | 8% | £0 | 0% |
This is why a headline rate is a poor way to compare plans. At a £200,000 quota the 8 percent plan above pays an effective 1.6 percent, which is less than a flat 2 percent plan with no quota at all on the same sales. Set the quota field in the calculator to zero to see the top row, or to your real number to see your own row.
The five common commission structures compared
Most disagreements about a commission plan come from comparing two different structures as though they were the same one. The table runs all five on identical figures: £250,000 of sales, a £100,000 quota where the structure has one, and a £30,000 base salary where the structure pays one. The deal is worth £250,000 in every row, so any difference in the last column is the structure itself, not the selling.
| Structure | How it pays | Base | Commission | Total earnings |
|---|---|---|---|---|
| Straight commission | 10% of every pound sold, no base, no quota | £0 | £25,000 | £25,000 |
| Salary plus commission | 8% of sales above a £100,000 quota | £30,000 | £12,000 | £42,000 |
| Tiered with accelerator | 8% from quota to £200,000, then 12% above | £30,000 | £14,000 | £44,000 |
| Gross margin commission | 20% of the profit at a 40% margin, not of revenue | £30,000 | £20,000 | £50,000 |
| Draw against commission | 10% of all sales, less a £24,000 advance already paid | £24,000 advanced | £1,000 still owed | £25,000 |
Two rows deserve a warning. A draw is a loan against future commission, not extra pay: if sales fall short of the drawn amount and the draw is recoverable, the shortfall is carried forward against your next cheque. And gross margin commission moves with the discount you give, so the same £250,000 sold at a 25 percent margin instead of 40 would pay £12,500 rather than £20,000. The profit margin calculator works out the margin percentage a deal actually carries.
OTE, pay mix and what each really guarantees
A sales job is usually advertised by its on-target earnings: the base salary plus the commission you would earn hitting exactly 100 percent of quota. OTE is a target, not a salary. What you are actually promised is the base, and the pay mix is the ratio between the two halves, so a 60/40 mix on £70,000 of OTE means £42,000 guaranteed and £28,000 at risk. The table takes the same £70,000 OTE across the four mixes you see in job adverts and pays it out at four levels of attainment.
| Pay mix (base/variable) | Guaranteed base | Variable at 100% | Earns at 60% | Earns at 80% | Earns at 100% | Earns at 120% |
|---|---|---|---|---|---|---|
| 50/50 | £35,000 | £35,000 | £56,000 | £63,000 | £70,000 | £77,000 |
| 60/40 | £42,000 | £28,000 | £58,800 | £64,400 | £70,000 | £75,600 |
| 70/30 | £49,000 | £21,000 | £61,600 | £65,800 | £70,000 | £74,200 |
| 80/20 | £56,000 | £14,000 | £64,400 | £67,200 | £70,000 | £72,800 |
The 100 percent column is identical in every row, which is the whole point of OTE: the mixes only differ in how much of it is a promise. At 60 percent attainment the 80/20 mix still pays £64,400 while the 50/50 mix pays £56,000, a gap of £8,400. Above quota the ranking flips, and an accelerator tier widens it further. These figures assume the variable half pays in proportion to attainment; plans with a cliff pay nothing at all below a stated percentage of quota, so read that clause before comparing offers. If you are pricing your own time rather than reading an offer, the freelance day rate calculator works back from a target income instead.
Frequently asked questions
How is commission calculated with a quota?
Commission applies only to sales above the quota. If your quota is £100,000 and you sell £250,000 at an 8 percent rate, commission is 8 percent of the £150,000 above quota, which is £12,000, not 8 percent of the full £250,000.
What if my plan has no quota?
Set the quota to zero and commission will apply to every pound of sales instead of only the amount above a threshold, matching a straight commission-on-all-sales structure.
What is the effective commission rate?
It divides total commission by total sales, giving you the rate as if it applied to every sale rather than only the amount above quota. It is useful for comparing two different quota-and-rate structures on a like-for-like basis.
What is a typical sales commission rate?
There is no legal or standard rate, and the number only means something alongside the base salary and the quota behind it. Plans that pay no base often sit between 10 and 20 percent of revenue, while plans with a full base salary and a quota commonly sit between 3 and 10 percent. A high headline rate behind a high quota can pay less than a low rate with no quota, so compare the effective rate rather than the headline.
What is OTE in a sales job?
OTE means on-target earnings: base salary plus the commission you would earn hitting exactly 100 percent of quota. It is not a guarantee. A £70,000 OTE on a 60/40 pay mix is £42,000 of guaranteed base and £28,000 of commission that only arrives at full quota, so at 70 percent attainment the same job pays about £61,600.
How does a tiered commission plan work?
A tiered or accelerator plan pays one rate up to a threshold and a higher rate beyond it. On a £100,000 quota with 8 percent to £200,000 and 12 percent above, £250,000 of sales pays 8 percent of the £100,000 between quota and threshold plus 12 percent of the £50,000 above it, which is £8,000 plus £6,000, or £14,000.
Is commission paid on revenue or profit?
It depends on the plan, and the difference is large. Commission on revenue pays the same on a discounted deal as a full-price one. Commission on gross margin pays a percentage of the profit instead, so a £250,000 deal at 40 percent margin and a 20 percent commission rate pays £20,000. Margin-based plans are common wherever the salesperson has authority to discount.
Does commission get taxed differently from salary?
In the UK commission is ordinary employment income. It goes through PAYE with income tax and National Insurance the same as salary. It can feel more heavily taxed because a large one-off payment is taxed in that pay period as though it repeated all year, but this evens out across the tax year.
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