The complete step-by-step guide for calculating commission in every industry. Real estate, car sales, SaaS, insurance, and B2B — with worked examples for each.
The foundation of every commission calculation is the same: multiply the sale amount (or gross profit) by the commission rate. What varies by industry is what counts as the "sale amount" and what deductions apply before or after the percentage is calculated.
Different industries use different bases. Real estate commissions are calculated on the full sale price of the property. Car sales commissions are calculated on gross profit (sale price minus dealer cost), not the sale price. SaaS commissions are calculated on Annual Contract Value (ACV). Insurance commissions are calculated on the policy premium.
Multiply your base amount by your commission rate as a percentage. If your rate is 3%, divide by 100 to get 0.03, then multiply by the base amount. Example: $500,000 x 0.03 = $15,000 gross commission.
Most salespeople share commission with a broker, employer, or referring agent. Multiply the gross commission by your split percentage to get your take-home amount. Example: $15,000 x 0.70 = $10,500.
Car salespeople subtract dealer pack fees from gross profit before applying their commission rate. Real estate agents may deduct referral fees after calculating net commission. SaaS reps may have draw amounts to recover. Each industry has its own fee layer — see the examples below.
Formula: Sale Price x Commission Rate x Agent Split (x referral deduction if applicable)
Example: $600,000 home at 2.8% listing commission, 75/25 broker split:
$600,000 x 0.028 = $16,800 gross commission
$16,800 x 0.75 = $12,600 agent take-home
Formula: (Sale Price - Dealer Cost - Pack Fee) x Commission Rate, with mini deal floor
Example: $36,000 sale, $33,000 cost, $1,000 pack, 25% commission:
Gross profit: $36,000 - $33,000 = $3,000
After pack: $3,000 - $1,000 = $2,000
Commission: $2,000 x 0.25 = $500 front-end commission
Formula: Deal ACV x Commission Rate, with accelerator if above quota
Example: $80,000 ACV deal at 10% commission, 110% quota attained:
Base commission: $80,000 x 0.10 = $8,000
Accelerator on 10% above quota (at 15% rate): $8,000 x 0.10 x 0.05 = $400 bonus
Total: $8,400
Tiered commissions assign different rates to different sales volume levels. Calculate each tier separately, then add them together.
Example: 5% on first $100,000, 7% on $100,001-$250,000, 10% above $250,000. If you sell $320,000:
Tier 1: $100,000 x 5% = $5,000
Tier 2: $150,000 x 7% = $10,500
Tier 3: $70,000 x 10% = $7,000
Total: $22,500
Use the Calculator: Instead of doing this math manually, use our commission calculator for instant results. Industry-specific calculators for real estate and car sales handle all deductions automatically.