Tiered Commission Calculator (USD)
Enter the revenue base, the two commission rates, the threshold where the higher rate kicks in, and any settlement adjustment. The calculator splits revenue across the two tiers, applies each rate exactly, sums the gross commission, and applies the adjustment to show the net payout in US dollars — with a full per-tier breakdown you can point to in a dispute.
Net commission
$5,151.00
6.11% effective rate on $84,300.00
Gross commission
$5,401.00
Adjustment
−$250.00
Per-tier breakdown
Commission by tier
Reconciliation (tiers → gross → net)
| Line | Base | Rate | Amount |
|---|---|---|---|
| Tier 1 | $25,000.00 | 5.00% | $1,250.00 |
| Tier 2 | $59,300.00 | 7.00% | $4,151.00 |
| Gross | — | — | $5,401.00 |
| Adjustment | — | — | −$250.00 |
| Net | — | — | $5,151.00 |
Compare scenarios
Run the same calculation with two or three input sets side by side. Differences are highlighted; every number comes from the same tested formula as the calculator above.
| Input | Scenario A | Scenario B |
|---|---|---|
| Revenue | ||
| Tier1 Rate Pct | ||
| Tier2 Rate Pct | ||
| Tier2 Threshold Amount | ||
| Adjustment Amount |
How it works
A tiered commission pays one rate on revenue up to a threshold and a different rate on everything above it. The calculator partitions the revenue base at the threshold: the first slice is min(revenue, threshold) and earns the tier-1 rate; the second slice is whatever revenue exceeds the threshold and earns the tier-2 rate. Each slice is multiplied by its rate and the two commissions are added together to give the gross commission. Because the split happens at a fixed, versioned threshold, the same inputs always produce the same number.
A settlement adjustment is then applied to the gross commission. A negative adjustment models a clawback, a fee deduction, or a correction from a prior period; a positive adjustment models a spiff, a bonus, or a manual top-up. The net commission is simply gross plus the signed adjustment. The effective rate shown underneath is the net commission divided by revenue, expressed as a percentage — a single figure that blends both tiers and the adjustment so you can compare periods at a glance.
All arithmetic accumulates in full precision and only the displayed values are rounded to the nearest cent (two decimal places), so the per-tier commissions always add up to the gross without a rounding gap. This is the same deterministic method behind a Verifiable Calculation Certificate: a fixed formula version, normalized inputs, and a reproducible output. That is what lets you reconstruct exactly how a commission figure was produced months later, tier by tier, instead of reverse-engineering a spreadsheet.
Methodology
How this number is produced: the exact formula identity, the assumptions it makes, its limitations, and the numeric profile used for rounding.
- Formula
- src/tools/tiered-commission/calc.ts#calcTieredCommissionv1.2.0
- Rounding profile
- vcc-decimal-v1
- Effective period
- Formula version 1.2.0 — current
- Last reviewed
- 2026-07-12
- Assumptions
- Two tiers only: revenue up to the threshold is paid at the tier-1 rate; revenue above the threshold is paid at the tier-2 rate.
- The threshold is a fixed, versioned parameter of the commission plan — it is part of the formula's identity, not an ad-hoc input.
- The settlement adjustment is a single signed dollar amount applied to the gross commission (negative = clawback/deduction, positive = spiff/bonus).
- All figures are in US dollars; arithmetic accumulates unrounded and only displayed values are rounded to the nearest cent.
- Limitations
- Educational estimate only — not payroll, accounting, or tax software, and not financial or legal advice; reconcile against your commission plan and payroll of record.
- Models two tiers and one adjustment; more complex plans (three or more tiers, per-product rates, caps, accelerators, proration) are out of scope.
- Currency conversion, withholding, and taxes are not modelled; the effective rate is net commission over revenue, nothing more.
Frequently asked questions
How is the threshold between the two tiers handled?+
Revenue up to and including the threshold is paid at the tier-1 rate; only revenue strictly above the threshold is paid at the tier-2 rate. For example, with a $25,000 threshold and $84,300 of revenue, the first $25,000 earns the tier-1 rate and the remaining $59,300 earns the tier-2 rate. If revenue is below the threshold, the second tier simply contributes zero and the whole amount is paid at the tier-1 rate. The threshold is part of the plan definition, so agree it in the contract before the period starts.
What does the settlement adjustment represent?+
The adjustment is a single signed amount applied to the gross commission after the tiers are calculated. Use a negative value for a clawback, a returned-goods deduction, a chargeback, or a correction carried over from an earlier period; use a positive value for a spiff, a manual bonus, or an agreed top-up. It is applied verbatim and shown separately so the gross, the adjustment, and the net are each visible. This is an educational tool, not payroll or accounting software, and it does not constitute financial, tax, or legal advice.
Is the API available for this calculator?+
Yes. POST to /api/v1/tools/tiered-commission-calculator with a JSON body containing revenue, tier1RatePct, tier2RatePct, tier2ThresholdAmount, and adjustmentAmount. The response returns the per-tier breakdown (base and commission for each tier), grossCommission, the applied adjustment, netCommission, and the effective rate. Because the calculation is deterministic and versioned, it is well suited to reconciling commission runs and producing a reproducible record of exactly how each payout was derived.
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