Commission Tiers Payout Calculator
Calculate a marginal tiered-commission payout where each band of sales earns a higher rate, plus your blended effective rate.
How it works
Commission = Σ (sales in each band × that band’s rate) · Blended rate = total commission ÷ total sales × 100
A marginal tiered plan pays each band of sales at its own rate — only the dollars above a threshold earn the higher rate, exactly like income-tax brackets. This is different from a "cliff" plan that applies one rate to the entire amount once a threshold is crossed. Because the top rate touches only the top band, the blended effective rate always lands between the lowest and highest tier rates.
Worked example
On $90,000 of sales with tiers at 3% up to $25,000, 5% from $25,000 to $60,000, and 8% above: the bands pay 25,000 × 3% = $750, 35,000 × 5% = $1,750, and 30,000 × 8% = $2,400. Total commission is $4,900, a blended rate of about 5.44%.
Frequently asked questions
Is this marginal or cliff (whole-amount) tiering?
This is marginal tiering — each band earns its own rate, so only sales above a threshold get the higher rate. In a cliff plan the entire sales figure is paid at the single rate for the tier reached, which pays out more once you cross a threshold.
What is the blended effective rate?
It is total commission divided by total sales. Because higher rates apply only to the top bands, the blended rate sits between your lowest and highest tier rates and is the simplest way to compare plans.
What if my sales fall below the first threshold?
Then only the first-tier rate applies to everything you sold, and the higher tiers pay nothing. The blended rate equals the tier-1 rate in that case.
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Educational estimate, not financial advice.