Marginal vs retroactive tiers
With a plan of 5% up to $100,000 and 8% above it, on $150,000 of sales:
| Method | Calculation | Commission |
|---|---|---|
| Marginal (each band at its rate) | $100,000 × 5% + $50,000 × 8% | $9,000 |
| Retroactive (all at the tier reached) | $150,000 × 8% | $12,000 |
The $3,000 gap on one rep is exactly the kind of error an audit finds. Check which method your plan document says, and apply it the same way every period.
Common commission errors
- Applying the wrong tier method
- Deals credited to the wrong rep or period
- Paying on booked rather than collected revenue when the plan says collected
- Clawbacks for cancelled deals not applied
Questions
How do I calculate commission?
Multiply sales by the commission rate. For tiered plans, either apply each band's rate to the sales within that band (marginal) or apply the highest tier reached to all sales (retroactive), as your plan document says.
What is a tiered commission structure?
A plan where the rate rises as sales pass thresholds, for example 5% up to $100,000 and 8% above it.
How do I audit commission payments?
Recalculate what each rep should have earned from the plan and their credited deals, then compare with what was paid. Investigate any difference.
Is my data uploaded?
No. Everything is calculated in your browser.
Last reviewed 27 September 2026.