Sales & Pricing
Sales Commission Calculator
Calculate commissions across 5 structures: flat, tiered, graduated, profit-based, and team pools
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Commission structure
Commission
Effective rate
How does it work?
Commission structures change rep behaviour. Flat-rate is simple but doesn't reward growth. Tiered creates threshold-jumping at boundaries. Graduated (marginal) is fairer but harder to explain. Profit-based aligns reps to margin. Team pools encourage collaboration. Pick the one that matches the behaviour you want.
How each structure pays
Each structure has its own payout formula:
Flat: Sales × Rate% | Tiered: Sales × (rate of the highest threshold hit) | Graduated: sum of each slice × its rate | Profit-based: (Sales − Cost) × Rate% | Team: pool ÷ split (leader gets share%, members share the rest equally)
Worked example
Rep sells 200,000 SAR this month with the default tiers (0→3%, 50k→5%, 150k→8%, 300k→10%). Graduated structure:
- 0 to 50,000 SAR at 3% = 1,500 SAR
- 50,000 to 150,000 SAR at 5% = 5,000 SAR
- 150,000 to 200,000 SAR at 8% = 4,000 SAR
- Total commission = 10,500 SAR
- Effective rate = 10,500 ÷ 200,000 = 5.25%
- Same sales under tiered (winner-takes-all) would pay 8% on all 200k = 16,000 SAR
Practical tips
- Tiered (cliff) commission causes month-end behaviour spikes — reps push to cross thresholds.
- Graduated is the industry default for mature teams; it removes the cliff incentive.
- Profit-based forces reps to defend margin — best when discounts are within their authority.
- Team pools work when individual attribution is messy (long enterprise cycles).
- Cap accelerators or model the upside before promising — runaway commissions can crater the P&L.
Frequently Asked Questions
What's the difference between tiered and graduated commission?
Tiered (cliff) applies the highest qualifying rate to *all* sales. Graduated applies each rate only to the slice of sales in that tier — like income tax. Graduated avoids the cliff effect at threshold boundaries.
How is commission taxed in Saudi Arabia?
Commission paid to Saudi employees is part of payroll and subject to GOSI (the employee 9.75% share plus employer 11.75%). It is not VAT-able as a salary component.
Should commission be on revenue or profit?
Revenue is simpler but encourages discounting. Profit-based aligns reps to margin and is preferred when reps have discount authority.
How do I split a team pool?
A common split is 30% leader / 70% divided equally among members. Adjust to match your team's effort distribution.
What's a reasonable commission rate?
Saudi retail averages 1–3%, B2B services 5–10%, SaaS 8–12% of first-year ACV. Vary by deal size and difficulty.
Can I model multiple products with different rates?
This tool computes one product/rate at a time. Run each line separately and sum the commission amounts.
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