Commission Calculator

A commission is a percentage-based payment made to a salesperson or agent for completing a sale. It is calculated as a percentage of the sale price.

The formula: Commission Amount = Sale Price × (Commission % ÷ 100)

Simple example: a $70 sale at 14% commission: $70 × 14% = $9.80.

Key scenarios:

• Seller pays commission: the seller receives $70 − $9.80 = $60.20
• Buyer pays commission: the buyer pays $70 + $9.80 = $79.80

Quick reference:

To use the commission estimator:

• Enter the sale price (the price of the item or service)
• Keep Flat rate selected and enter the commission percentage
• Review the commission amount, seller revenue, and buyer price. The results update as you type.
• Optional: switch to Tiered milestones for a graduated plan, and add base pay or a bonus to see total pay

Example input and output:

Another example (real estate):

In a home sale the commission is normally paid out of the proceeds, so the seller revenue line is the one that applies. The buyer price line is for deals where a fee is added on top of the price.

A commission is a payment made to a salesperson, agent, or broker for arranging a sale. It is usually a percentage of the sale price.

Key points:

• Commission is performance-based: you earn it when you make a sale
• Commission rates vary by industry and product type
• Commission can be paid by the seller, the buyer, or both
• Commission is a common form of pay in sales roles

Types of commission:

How is commission calculated? It is a simple percentage calculation: Commission Amount = Sale Price × (Commission % ÷ 100).

Step 1: Identify the sale price. Sale price = $70.

Step 2: Identify the commission percentage. Commission = 14%.

Step 3: Convert the percentage to a decimal. 14% ÷ 100 = 0.14.

Step 4: Multiply. $70 × 0.14 = $9.80.

Answer: commission = $9.80.

Worked examples:

When the seller pays the commission, their revenue is reduced by the commission amount.

The formula: Seller Revenue = Sale Price − (Sale Price × Commission % ÷ 100)

Step 1: Sale price = $70.

Step 2: Commission = 14%.

Step 3: Commission amount = $70 × 0.14 = $9.80.

Step 4: Subtract from the sale price: $70 − $9.80 = $60.20.

Answer: seller revenue = $60.20.

Worked example 4: seller revenue on a $500,000 home. A home sells for $500,000 with a 6% commission paid by the seller. Commission = $500,000 × 0.06 = $30,000. Seller revenue = $500,000 − $30,000 = $470,000, before closing costs, taxes, and paying off any mortgage.

When the buyer pays the commission, their price is increased by the commission amount.

The formula: Buyer Price = Sale Price + (Sale Price × Commission % ÷ 100)

Step 1: Sale price = $70.

Step 2: Commission = 14%.

Step 3: Commission amount = $70 × 0.14 = $9.80.

Step 4: Add to the sale price: $70 + $9.80 = $79.80.

Answer: buyer price = $79.80.

Worked example 5: buyer price on a service. A service costs $200 with a 10% commission paid by the buyer. Commission = $200 × 0.10 = $20. Buyer price = $200 + $20 = $220.

Rates vary widely by employer, product, and region. Treat these as rough ranges, and use the rate in your own agreement.

Scenario 1: real estate commission. A home sells for $350,000 with a 6% commission. Commission = $350,000 × 0.06 = $21,000.

Scenario 2: car sales commission. A car earns the dealership $3,000 of gross profit and the salesperson is paid 25% of it. Commission = $3,000 × 0.25 = $750. If the plan paid 10% of a $30,000 sale price instead, the commission would be $3,000, which is why checking what the rate applies to matters.

Scenario 3: retail commission. A salesperson sells $5,000 of merchandise at 5% commission. Commission = $5,000 × 0.05 = $250.

Scenario 4: tiered commission. A salesperson earns 5% on the first $100,000 of sales and 8% on sales above $100,000, and sells $150,000.

• First $100,000 × 5% = $5,000
• Next $50,000 × 8% = $4,000
• Total commission = $9,000

To check this in the calculator, choose Tiered milestones and Marginal, set Tier 1 to $100,000 at 5%, and set Tier 2 and Tier 3 to 8%.

Scenario 5: buyer-paid commission. A service costs $500 with a 15% commission paid by the buyer. Commission = $500 × 0.15 = $75. Total price = $500 + $75 = $575.

Key insight: commission is paid to a salesperson. Margin and markup measure the business's profit. Work those out with the margin calculator and the markup calculator.

A real estate commission calculator is a specific use of the same percentage formula.

How real estate commission works:

• Total commission has usually been about 5–6% of the sale price, and every rate is negotiable
• It is usually split between the listing agent and the buyer's agent, and each agent then shares their part with their brokerage
• The seller has traditionally paid both agents from the sale proceeds. Since the August 2024 National Association of Realtors settlement rules, buyers sign a written agreement with their own agent, and who pays the buyer's agent is agreed deal by deal

Example: a home sells for $500,000 at a 6% commission. Total commission = $30,000. Split 50/50, that is $15,000 to each agent's brokerage.

Seller's net proceeds: $500,000 sale price − $30,000 commission = $470,000, before other closing costs.

For brokerage splits and each agent's take-home, use the real estate agent commission calculator.

Problem 1: A salesperson earns 8% commission on a $2,500 sale. What is their commission?

Solution: $2,500 × 0.08 = $200.

Problem 2: A home sells for $400,000 with a 5% commission. What is the commission amount?

Solution: $400,000 × 0.05 = $20,000.

Problem 3: A sales rep sells $25,000 of equipment at a 12% commission. What is the commission?

Solution: $25,000 × 0.12 = $3,000.

Problem 4: A service costs $1,000 with a 20% commission paid by the buyer. What is the total price?

Solution: commission = $1,000 × 0.20 = $200. Total price = $1,000 + $200 = $1,200.

Problem 5: A salesperson earns 6% on the first $50,000 and 9% on sales above $50,000, and sells $80,000. What is their commission?

Solution: $50,000 × 6% = $3,000. Next $30,000 × 9% = $2,700. Total commission = $5,700.

Answers: 1. $200 · 2. $20,000 · 3. $3,000 · 4. $1,200 · 5. $5,700

This calculator can help with:

• Calculating the commission amount on any sale
• Calculating seller revenue (when the seller pays)
• Calculating the buyer price (when the buyer pays)
• Real estate, car sales, retail, and service commissions
• Tiered plans with up to three tiers, on marginal or retroactive rules
• Total pay with base salary and bonus

This calculator cannot:

• Account for taxes on commission
• Replace professional financial advice
• Calculate margin or markup (use the separate calculators)
• Handle draws against commission, caps, splits, or more than three tiers
• Account for chargebacks or returns
• Decide the best commission rate for your business

Use these related tools when your business problem connects to other concepts:

A commission calculator is useful for anyone earning commission-based income: real estate agents, car salespeople, retail staff, and business owners. Knowing how to calculate commission, and how to work it out for different scenarios, helps you track your earnings accurately.

Remember the key formulas:

• Commission amount: Sale Price × (Commission % ÷ 100)
• Seller revenue: Sale Price − Commission
• Buyer price: Sale Price + Commission

Quick reference: 5% of $100 = $5.00 · 10% of $100 = $10.00 · 15% of $100 = $15.00 · 20% of $100 = $20.00

Enter your values in the calculator above to get your commission, free and with no sign-up.