How to Calculate the Commission for Your Sales Salary

With a clear and fair commission structure, salespeople can "right their own paycheck."
With a clear and fair commission structure, salespeople can "right their own paycheck." (Image: Jupiterimages/Pixland/Getty Images)

Sales jobs often have a compensation package that includes a base salary with sales commission added on top. The commission structure pays salespeople based on a percentage of the sales they make and the business they bring in, serving as an incentive to increase sales. Generally, commissions are awarded at a higher percentage for new business, and the threshold at which salespeople earn commission raises year over year. Knowing your sales numbers and details of your package helps you calculate your commission.

Read the details of your compensation agreement. Different employers offer different structures. Knowing all the fine print and rules helps you understand what you can expect to be paid.

Review your sales numbers for the given period. If you're trying to calculate your commission for a month, look at sales for that period, paying attention to such details as when the contracts are signed or when money comes in. Your business may not award your commission until cash is in hand, regardless of whether you have a signature on the dotted line.

Calculate percentages appropriately. You may get a 10 percent commission on sales from new business and 5 percent on increases in contracts with existing clients. If you bring in $1,000 in new business, for example, that equals $100 in commission; $1,000 in increases with existing clients results in $50. The total commission for this period, therefore, is $150.

Factor in tiered systems. Commissions may pay on a system based on a percentage of sales in relation to last year’s total. If you hit 100 percent of you sales total from last year, for example, you may receive 5 percent of that total in commission. If you come in at 101 to 150 percent, you receive 7 percent commission; anything above that pays 10 percent.

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