What does this plan
actually pay
Revenue, quota and a rate. The result shows the tier the ladder selected and what the same plan pays under both tiering conventions, because the difference between them is usually thousands of dollars and rarely written down.
The same plan, read two ways
Retroactive pays the selected rate on every dollar. Marginal pays each band at its own rate. A plan document that says only "9% above target" has not said which of these it means.
Retroactive
$70,200.00
Marginal
$52,200.00
$18,000 apart on one rep, in one period.
- $0 to $600,000 at 6%
- $36,000.00
- $600,000 to $900,000 at 9%
- $16,200.00
Marginal, band by band
Tier selection here uses the same code as a real Commish pay run, including the rule that a rep one cent short of target has not reached the next tier. Commish runs the retroactive convention; marginal is shown for comparison. Nothing typed on this page is sent anywhere.
Why the same plan produces two different numbers
A tier ladder that pays 6% to target and 9% above it can be read two ways, and almost no plan document says which. Under the retroactive reading, clearing target lifts the rate on every dollar sold that period, including the ones sold at 6%. Under the marginal reading, the first band keeps its own rate and only the revenue above target earns 9%.
On the default figures above, one rep in one period lands $18,000 apart depending on which reading applies. Multiply that across a team and a year and the ambiguity is a serious number that nobody budgeted for, sitting inside a sentence everybody thought was clear.
Retroactive is the more common convention in sales compensation and it is what Commish runs. The reason to show both here is that the disagreement is usually discovered on the first big month, in an argument with a rep who has already done the arithmetic their way.
The boundary that decides tier membership
A rep at 99.99% of quota has not reached the 100% tier. That sounds obvious written down and it is the source of a real category of dispute, because attainment usually has to be rounded somewhere and rounding up at the boundary hands out a higher rate on the whole period.
This calculator uses the same tier selection code as a Commish pay run, which floors attainment to basis points and never rounds a rep into a band they did not reach. A rep one cent short stays one cent short. The error that introduces is smaller than one hundredth of a percent, and it always errs against overpaying a tier nobody hit.
What a calculator cannot do
This page takes one rep, one period, one rate structure. A real pay run has splits between two reps on the same deal, a manager override riding on top, deals that closed inside the period but funded outside it, clawbacks reaching back into a period already paid, and a quota that changed in March.
None of that fits in three text boxes, and a tool that pretended otherwise would be the wrong advertisement for software built to handle exactly those cases. Use this to settle a rate question. Use something that keeps an audit trail to pay people.
- How do you calculate commission?
- Multiply the commission basis by the commission rate. The basis is whatever the plan pays on, commonly revenue, gross margin or contract value, and the rate is the percentage agreed in the plan document. A flat plan is one multiplication: $80,000 of revenue at 8% pays $6,400. A tiered plan first works out attainment against quota, selects the rate for that band, and then applies it.
- What is the difference between retroactive and marginal tiers?
- Retroactive tiering applies the rate of the highest band a rep reaches to all of their revenue for the period. Marginal tiering pays each slice of revenue at the rate of the band it falls in, so revenue sold below target keeps the lower rate. The two produce materially different payouts on the same sales, which is why a plan document should state which one it means.
- Does a rep at 99.9% of quota reach the 100% tier?
- No, under any correctly implemented plan. Tier floors are inclusive minimums, so a rep needs to reach the threshold rather than get close to it. Rounding attainment up at the boundary is a common spreadsheet error and it awards the higher rate across the whole period, which makes it expensive rather than generous.
One rep on one page is
the easy version
Commish runs the whole team every pay cycle, against the plan you actually wrote, and shows the working on every line.