How the tiered sales commission calculator works
A marginal tiered commission plan pays different rates on different portions of credited sales. Crossing a boundary changes the rate on additional sales; it does not automatically change the rate on revenue already earned in lower bands. This calculator uses three bands and shows their payouts separately so the total can be checked.
Boundaries are cumulative. If the first band ends at 100,000 and the second at 125,000, the middle band spans 25,000 of sales. Revenue above 125,000 belongs to the final band. Rates are entered as percentages and can differ in any direction according to the plan.
Commission = sales in tier 1 × rate 1 + sales in tier 2 × rate 2 + sales in tier 3 × rate 3
Worked example
Start with the example inputs below. The calculator opens with these values; reset the example at any time to compare your own scenario. Monetary examples use GBP, and all amounts must use the same currency.
| Measure | Value |
|---|---|
| Commissionable sales | 150000 |
| End of tier 1 | 100000 |
| End of tier 2 | 125000 |
| Tier 1 rate (%) | 5 |
| Tier 2 rate (%) | 8 |
| Tier 3 rate (%) | 12 |
| Measure | Value |
|---|---|
| Total marginal commission | £10,000.00 |
| Tier 1 payout | £5,000.00 |
| Tier 2 payout | £2,000.00 |
| Tier 3 payout | £3,000.00 |
Each rate applies only to sales inside its band. This excludes retroactive accelerators, clawbacks, caps and base salary.
How to use the result
Enter commissionable revenue after applying the plan's ownership, split and credit rules. Match boundary amounts to the compensation period: monthly bands should not be compared with annual credited sales. Test values just below, exactly at and just above each boundary to understand the payout.
Use the breakdown when discussing an accelerator. It makes clear which extra sales receive the higher rate and how much each band contributes. Keep contractual language beside the calculation so sellers can see whether the plan is marginal or retroactive.
Assumptions and common mistakes
This is a three-band marginal model. It excludes retroactive accelerators, thresholds that gate all payment, caps, clawbacks, taxes and base salary. A compensation plan with those features needs its own rules; this estimate should not be treated as a payroll instruction.