How commission is calculated
Sales commission is normally a percentage of the deals you close, paid on top of your base (if you are W-2) or as your only income (if you are 1099). The basic math is simple: commission = deal value × commission rate. Close a $25,000 deal at 8% and you earn $2,000. Close four a month and that is $8,000 a month, or $96,000 a year.
Flat rates vs tiers vs accelerators
Plans come in three shapes. A flat rate pays the same percentage on every deal — the simplest and what this calculator models. A tiered plan pays a higher rate as you cross thresholds (e.g. 5% under quota, 8% at quota, 12% above). An accelerator is the same idea applied above 100% of quota: you earn a higher rate on the overage, which is how high earners blow past their OTE. This calculator gives the flat-rate base case; a real plan with tiers will pay more than the number here if you are above quota.
Closed revenue vs signed contracts
Plans differ in what they pay you on: closed revenue (cash collected, or ARR recognized) vs signings / booked business (contract value the quarter it is signed). For a 12-month contract, that timing shift matters a lot — a signing pays the full-year value up front, while a revenue plan pays as the cash lands. When you read an offer, ask which basis is used, and whether commission is paid monthly or quarterly — the timing affects your real cash flow and how it feels.
The catch: clawbacks and caps
Two clauses separate a good plan from a trap. A clawback lets the company take back commission if a deal cancels or a customer churns early — common and legitimate within the first year, but the terms vary wildly. A cap puts a ceiling on how much commission you can earn in a period, which kills the upside that makes sales worth it. Negotiating a plan is not just about the rate; it is about removing the cap, shortening the clawback window, and locking in the accelerator. Rate up, cap off, clawback short — that is the order of importance.