Question 1

How do I calculate my commission earnings?

Accepted Answer

For a flat rate, multiply your total sales by the commission percentage. For example, $50,000 in sales at 8% commission = $4,000. Tiered structures apply different rates at different sales thresholds.

Question 2

What's the difference between OTE and base salary?

Accepted Answer

OTE (On-Target Earnings) is the total compensation you'd earn if you hit 100% of your sales quota: base salary plus expected commissions. If your OTE is $100,000 with a $60,000 base, you'd need to earn $40,000 in commissions to hit target.

Question 3

How does tiered commission work?

Accepted Answer

Tiered structures pay increasing rates as you sell more. For example: 5% on the first $25,000, 8% on $25,001–$75,000, and 12% above $75,000. This rewards high performers with accelerating earnings.

Question 4

Is commission income taxed differently?

Accepted Answer

Commission income is taxed as regular income. However, employers often withhold at a flat supplemental rate (22% federal), which can feel like you're taxed more. Your actual tax rate is determined when you file your return.

Question 5

How do I budget with variable commission income?

Accepted Answer

Budget based on your base salary alone and treat commissions as bonus income. Alternatively, use a rolling 3-month average of your total earnings to set a realistic monthly budget.

Question 6

What's a good commission rate?

Accepted Answer

It varies by industry. Real estate agents typically earn 2.5–3%, SaaS salespeople earn 8–15%, and retail workers earn 1–5%. Higher commission rates usually come with lower or no base salaries.

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