GuideCalculatorDetailed Guide

How to Build a Commission Calculator

A commission calculator determines earnings based on sales performance. Used by salespeople, managers, and companies to forecast compensation and design incentive structures.

What is a Commission Calculator?

Commission is variable pay based on sales volume or revenue. Structures vary: flat percentage, tiered rates (higher % at higher volumes), draw against commission, or hybrid base + commission models.

The Formula

Simple Commission = Sales × Commission Rate
Tiered Commission = Sum of (Sales in Tier × Tier Rate)
Draw Against = Max(Commission Earned, Draw Amount) - Draw Amount
OTE (On-Target Earnings) = Base Salary + Expected Commission

Code Example

JavaScript

function calculateSimpleCommission(sales, rate) {
  return sales * (rate / 100);
}

function calculateTieredCommission(sales, tiers) {
  // tiers: [{ threshold: 0, rate: 0.05 }, { threshold: 50000, rate: 0.08 }, ...]
  let commission = 0;
  let remaining = sales;

  for (let i = tiers.length - 1; i >= 0; i--) {
    const tier = tiers[i];
    if (remaining > tier.threshold) {
      const salesInTier = remaining - tier.threshold;
      commission += salesInTier * tier.rate;
      remaining = tier.threshold;
    }
  }
  return commission;
}

function calculateOTE(baseSalary, targetSales, commissionRate) {
  return baseSalary + (targetSales * commissionRate);
}