What does this tool calculate?
The tool calculates a sales rep's commission from their sales for the period and a tier table you write (up to 6 tiers: the amount each tier starts from, and its rate). It shows the commission due, the effective rate (commission ÷ sales), and a breakdown of each tier: the amount in it, its rate and its commission, what the commission would be under the other method, and how much more the rep needs to sell to reach the next tier and what their commission would be then.
It is for anyone who decides or calculates commission: the accountant preparing payroll, the sales manager designing an incentive plan, and the business owner who wants to know what each plan costs before approving it. The whole calculation happens inside your browser, and your numbers are not uploaded to any server.
How to use it
- Enter the rep's sales for the period (the month or the quarter, according to your policy).
- Enter the tier table: the first tier starts from 0, each tier starts from an amount greater than the one before and ends where the next one starts, and the rate is a number out of 100 (such as 3).
- Choose the calculation method: progressive or single tier.
- If the amounts include VAT, select that, and the VAT (15%) is extracted before the calculation.
- Optionally: the target and the percentage of it that must be reached to earn commission, and a cap on the commission.
- The result appears instantly, and you can download the PDF report or an Excel file with real formulas.
The two methods: progressive or single tier?
- Progressive: each part of the sales is paid at the rate of its tier, like progressive tax. The first 100,000 at the first tier's rate, what comes after it up to the start of the third tier at the second tier's rate, and so on. The commission doesn't jump at tier boundaries, and each extra riyal earns only its own tier's rate.
- Single tier: all sales are paid at the rate of the highest tier the rep reached. It is simpler to explain and a stronger incentive near a tier boundary, but the commission jumps at the start of each tier: one extra riyal can raise the rate on all sales.
There are no regulatory commission rates and no mandatory method: the tiers and their rates, the target and the cap are set by the business in its commission policy or in the rep's contract.
Example: a rep who sold 180,000 SAR
The tier table: from 0 at 2%, from 100,000 at 3%, and from 150,000 at 5%.
| Tier | Amount in tier | Rate | Progressive commission |
|---|---|---|---|
| From 0 to 100,000 | 100,000 | 2% | 2,000 |
| From 100,000 to 150,000 | 50,000 | 3% | 1,500 |
| From 150,000 and above | 30,000 | 5% | 1,500 |
Using the progressive method: 2,000 + 1,500 + 1,500 = 5,000 SAR, and the effective rate is 5,000 ÷ 180,000 = 2.78%.
Using the single tier method: the rep reached the third tier, so all sales are at 5%: 180,000 × 5% = 9,000 SAR, i.e. 4,000 SAR more than the progressive method for the same sales.
Example: how much more to reach the next tier?
With the same table, a rep sold 140,000 SAR. Their progressive commission is 2,000 + 40,000 × 3% = 3,200 SAR, and they need 10,000 SAR more to reach the third tier (150,000), where their commission becomes 3,500.
Using the single tier method, their commission today is 140,000 × 3% = 4,200, and at 150,000 it becomes 150,000 × 5% = 7,500: ten thousand riyals of extra sales raise their commission by 3,300 SAR. This jump is a strong incentive, but it can push reps to delay sales from one period to another or bring them forward.
The target: if their target were 200,000 SAR and commission is not earned below 80% of it, the threshold is 200,000 × 80% = 160,000; their sales of 140,000 reached 70% of the target, so their commission is zero and they need another 20,000 SAR to earn it.
VAT: if sales were 172,500 SAR including VAT, then before VAT they are 172,500 ÷ (1 + 15%) = 150,000, and the VAT of 22,500 is paid to ZATCA and is not revenue, so the progressive commission on 150,000 = 3,500 SAR.
Before you approve a commission plan
- Calculate the cost on real numbers: try both methods on your reps' sales from past months, and compare the commission with your profit margin, not with sales alone.
- Define “sales” clearly: before or after VAT, after or before returns and discounts, and at invoicing or at collection.
- Write down the terms: the target, the cap and the calculation method in a written policy or in the contract, so the accountant's calculation doesn't differ from what the rep expects.
Frequently asked questions
Is the tool free?
Is there a regulatory rate for sales commission?
What is the difference between the progressive method and the single tier method?
Is commission calculated on sales before or after VAT?
Why does the tool reject my tier table?
Are my numbers uploaded to the website?
Content last reviewed: 2026-11-04