Model a three-tier commission plan
Use this scenario to test how quota attainment and tier rates affect commission and an operating-profit view. Enter gross sales, a positive quota, base salary, COGS, selling expenses, and rates for sales up to quota, from 100% to 150% of quota, and above 150%. Keep every dollar amount in the same period.
Tier rules
This is product-defined arithmetic, not a standard compensation plan. Tier 1 covers sales up to quota, tier 2 covers the next half-quota, and tier 3 covers sales above 1.5 times quota. Each slice is multiplied by its own rate and summed. Gross profit is sales minus COGS; base pay plus commission is the displayed total cash compensation; the displayed operating profit is gross profit minus selling expenses and commission. Effective commission rate is commission divided by sales.
At $50,000 sales against a $100,000 quota, with a $60,000 base salary, $30,000 COGS, $10,000 selling expenses, and rates of 5%, 8%, and 12%, only tier 1 applies. Commission is $2,500, attainment is 50%, base pay plus commission is $62,500, gross profit is $20,000, and the displayed operating profit is $7,500. At $120,000 sales with $70,000 COGS, commission becomes $6,600: $5,000 on the first $100,000 plus $1,600 on the next $20,000. Use this comparison to check the first threshold before testing the top tier.
Quota must exceed zero. Sales, salary, COGS, expenses, and rates cannot be negative. The form does not impose a maximum commission rate, so rates above 100% are accepted as user-entered scenarios. Zero sales produces 0% attainment, margin, and effective rate. Costs can exceed sales and produce negative profit. Blank and invalid numeric entries are invalid.
The outputs omit taxes, benefits, draws, clawbacks, caps, timing, eligibility, and contract terms. They are not payroll, accounting, employment, or legal advice. Reconcile the sales base first with the sales calculator.