Commission Calculator

How to use the commission calculator

Start with Calculator mode. Sales commission suits salespeople, brokers and affiliates paid a cut of what they sell. Realtor commission is for real estate and also shows what the seller keeps and what a buyer would pay, so its first box is labelled Sale price.

Then decide what you want to find:

• Commission amount: enter the sales (or sale price) and the commission rate. The rate box accepts 0 to 99.
• Commission rate: enter the sales (or sale price) and the commission you were paid. The result is the effective percentage, shown with up to twelve decimal places and without trailing zeros.

Dollar results are rounded to the cent. Whole amounts appear without decimals, such as $375, and everything else with two, such as $41.15.

Commission formulas

A commission is a percentage of the value of a sale, so it is the ordinary percentage calculation applied to money:

commission = sales × rate ÷ 100

rate = commission ÷ sales × 100

In realtor mode two more lines are derived from the sale price and the commission:

seller keeps = sale price − commission

buyer pays = sale price + commission

The two lines show the sale price from each side. The first applies when the commission comes out of the sale proceeds; the second is the total if the commission were added on top of the price. Which one fits depends on local custom and on your contract, and both ignore other closing costs, taxes, mortgage payoffs and fees. For the general mechanics of percentages see the percentage calculator.

Sales commission examples

Commission from a rate. A representative sells $5,000 of equipment and earns 7.5%. The commission is 5,000 × 7.5 ÷ 100 = $375.

Pay with a base salary. An employee earns a base of $2,800 a month plus 4% of sales. In a month with $42,000 in sales, the commission is 42,000 × 0.04 = $1,680, so total pay is 2,800 + 1,680 = $4,480.

Rate from the amount paid. If $375 was paid on $5,000 of sales, the effective rate is 375 ÷ 5,000 × 100 = 7.5%. This is the quickest way to check a payslip against the rate in your plan, or to turn a flat bonus into a percentage.

Tiered plans. Many plans pay a higher rate on sales above a threshold. Suppose 5% applies to the first $20,000 and 8% to anything above it. On $30,000 of sales the commission is 1,000 + 800 = $1,800. Enter the sales and the $1,800 into the calculator's rate mode and it reports an effective rate of 6%, between the two tier rates, since the first $20,000 earned less.

Real estate commission

Real estate commission is normally a percentage of the final sale price. In many markets rates have often fallen somewhere between 4% and 6% in total, but the figure is negotiable and varies with location, price and the services included, and the rules on who pays whom have been changing in recent years. Always rely on the rate written in your agreement.

Example. A home sells for $350,000 with a 5.5% commission. The commission is 350,000 × 0.055 = $19,250, the seller keeps 350,000 − 19,250 = $330,750, and the figure including the commission is 350,000 + 19,250 = $369,250.

That total is usually shared. If it is split evenly between the two sides' brokerages, each receives $9,625, and an agent with a 70/30 arrangement with their brokerage would take home 9,625 × 0.70 = $6,737.50 before expenses and taxes. Working backward, a $19,250 fee on a $350,000 sale returns an effective rate of 5.5% in realtor rate mode.

These calculations are illustrations of the arithmetic, not legal, tax or financial advice. Contracts differ, so check your own agreement; see the disclaimer.

Common mistakes

• Mixing up the base. Some plans pay on revenue, others on gross profit. A 10% commission on a sale with a 30% margin is a third of the profit, not a tenth of it.
• Typing the rate as a decimal. Enter 7.5 for 7.5%, not 0.075.
• Forgetting returns and refunds. Many plans deduct commission on cancelled or refunded sales, so net sales may be smaller than gross sales.
• Ignoring the effect of tiers or caps. A flat rate overstates or understates pay when the plan is tiered; use the effective rate from the rate mode to compare plans.
• Treating commission as take-home pay. Taxes, social contributions and, for self-employed people, business expenses still apply.

If you want to see how a pay change compares with the old figure, the percent increase calculator and percent decrease calculator give the relative change.