Suppose that you have cumulative tiers like this:

Next, assume that one payee had $1000 in total sales.

It’s quite easy to calculate the commissions from this $1000 total amount:

- From $0 to $100, apply 0% over the first $100 portion = $0
- From $100 to $200, apply 5% over the next $100 portion = $5
- From $200 to $500, apply 7% over the next $300 portion = $21
- From $500 to $1000, apply 9% over the next $500 portion = $45

The commission over the entire $1000 amount is $76, and it was not particularly difficult to calculate. Here is how we sliced the $1000 total amount based on the tiers above:

This gets a lot harder if you have multiple deals. For example, consider the following 4 deals (in chronological order).

- Deal #1 is worth $30
- Deal #2 is worth $550
- Deal #3 is worth $150
- Deal #4 is worth $300

**Now, suppose that you want to show to your reps what commission they earned on each deal.**

Intuitively, **Deal #2** **will cross multiple tiers**. A portion of its $550 will be paid at 0%, a portion at 5%, a portion at 7%, a portion at 9%. This means a blended commission rate. This is very difficult to calculate, especially if you have a lot of deals. Enter our free calculator which does this automatically for you. Internally, our calculator knows how to split the single $550 amount into portions, and apply the relevant tier percentage to each portion.

Let’s enter our deals like this:

Next, click on “Calculate Commissions”:

Awesome! We get correct commission amounts for each deal, and even blended commission rates. We’ll walk you through the math for Deal #2. Deal #2 is worth $550, and follows a $30 deal just before it. Therefore, it should be split into the following portions:

- A $70 portion at 0% = $0
- A $100 portion at 5% = $5
- A $300 portion at 7% = $21
- A $80 portion at 9% = $7.2

If we sum all this, we get $33.20 in commissions, with an effective rate of 6.04%. Our calculator is correct!

**In Conclusion**

Our free calculator lets you calculate **per-deal commission amounts **using cumulative tiers. Now, you can show your payees what they earned on each deal and progression towards higher tiers. Note that our calculator only works one payee at a time. And it doesn’t handle scenarios such as non-cumulative tiers, variable rates, quotas, splits, etc. All these capabilities and much more can be found within Sales Cookie. Generating commission spreadsheet manually is difficult and time-consuming. Using Sales Cookie, you can automate all this slicing and dicing, and pay your reps accurately and on-time. Visit us online to learn more!