Tiered Commission Calculator
Calculate sales pay with a base salary plus a two-tier commission — one rate up to a threshold and a higher rate above it.
How it works
Commission = min(sales, threshold) × rate1 + max(0, sales − threshold) × rate2 · Total pay = base + commission
A tiered plan pays one rate on sales up to a threshold and a higher rate on everything above it, rewarding reps for pushing past a target. Only the portion of sales inside each band earns that band’s rate — the higher rate never applies retroactively to the whole amount. Adding a base salary gives the on-target earnings, and the effective rate shows the blended commission across all sales.
Worked example
With $60,000 in sales, a 5% rate up to a $25,000 threshold pays $1,250; the remaining $35,000 at 8% pays $2,800 — $4,050 commission. Add a $3,000 base for $7,050 total, an effective commission rate of 6.75%.
Frequently asked questions
Does the higher rate apply to all sales?
No. In a standard tiered plan, only the sales above the threshold earn the higher rate; sales below it stay at the lower rate. This is called a marginal or graduated structure, like income tax brackets.
What is the effective commission rate?
It is total commission divided by total sales — the single blended rate that would produce the same payout. It sits between your two tier rates and rises as more sales fall into the higher band.
How is this different from a flat commission?
A flat plan applies one rate to every dollar of sales. A tiered plan raises the rate past a threshold, giving stronger incentive to exceed targets while keeping payouts affordable on lower volumes.
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Educational estimate, not financial advice.