Frequently asked questions
How is commission calculated?
Flat-rate commission is simply: sales amount × commission rate. For example, $75,000 in sales at 8% = $6,000 commission. This calculator uses a flat rate; tiered structures (different rates for different brackets) require summing each tier separately.
What is a typical commission rate?
Varies widely by industry. Retail: 1–5%. SaaS/tech sales: 5–15%. Real estate: 2.5–3% per side. Insurance: 5–15% first year. Financial services: 1–2% of assets. Higher-margin products and longer sales cycles usually command higher rates.
Should I prefer higher base or higher commission?
Higher base provides stability and lower risk. Higher commission rewards top performers but creates income variability. Early in a role or uncertain market, prefer a higher base. Once you know you can consistently hit targets, a higher commission ceiling often pays more.
Is commission taxed differently than salary?
Commission is taxed as regular income. However, it may be withheld at a higher supplemental rate (22% federal in the US) by payroll, which can cause surprises. The actual tax owed at year-end is the same — it is reconciled on your return.
What are OTE and quota?
OTE (On-Target Earnings) is base + expected commission if you hit 100% of quota. Quota is the sales target. Example: $60k base + $40k commission at quota = $100k OTE. The commission rate × quota should equal the commission portion of OTE.