Commission: Rates, Tiers & Sales Compensation Math

Industry

Typical rate

Retail / field sales

1%–5%

Real estate agency

2%–3%

Insurance

10%–30%

Livestream e-commerce

5%–20%

Restaurant group-buying

10%–25%

Core answer: Commission = sales × rate, with three structures: flat (same rate on all sales), tiered (rate steps up at thresholds), and progressive (each bracket of sales earns its own rate — like tax brackets). On ¥500k sales with tiers "3% to ¥300k, 5% above": flat-style = 500k × 5% = ¥25k; progressive = 300k×3% + 200k×5% = ¥19k. Know which one your contract says — the difference is ¥6,000.

The three structures

Structure	How it computes	¥500k example (3%/5% @300k)
Flat	all sales × current tier rate	¥25,000
Progressive (超额累进)	each bracket × its rate	¥19,000
Base + commission	salary + (sales × rate)	¥3,000 + 3% = ¥18,000

Tiered vs progressive: read the clause

"销售额超过30万部分按5%" = progressive (only the excess gets 5%).
"达到30万后按5%计提" = ambiguous — demand clarification in writing; courts see both interpretations.
"跳档" = flat (hitting the tier retroactively re-rates everything) — common in渠道分销.

Worked examples

Example 1 — Real-estate agent. ¥3M sale at 2% total commission: agency takes ¥60k; agent's split (say 40%) = ¥24,000; minus platform/brand fees ≈ ¥19k take-home before tax.

Example 2 — SaaS sales. Base ¥8k + 8% of new ARR: closing ¥400k ARR = ¥32,000 commission + base. With a 1.2× accelerator above quota (¥300k): excess ¥100k × 9.6% = ¥9,600 vs ¥8,000 flat — accelerators reward overperformance deliberately.

Example 3 — Insurance. First-year commission on life policies runs 20–40% of first-year premium (renewals 2–5%): a ¥10k annual policy pays the agent ¥2,000–4,000 year one — why agents push premium-heavy products. Understand the incentive behind the advice.

Example 4 — Refund clawback. ¥50k sale returned next month: standard contracts claw back the ¥1,500 commission; check whether clawback survives resignation (usually yes for 3–6 months).

Common mistakes and myths

Ignoring the tax treatment — commission is wage income (工资薪金) for employees (3–45% brackets) vs labor remuneration for independents (with 20% deduction then brackets); the same ¥10k nets differently.
Assuming verbal tiers — "we'll take care of you at year-end" is not a compensation plan; get the tier table, base, clawback, and payment timing in writing.
Gross vs net basis — commission on revenue vs on COLLECTED payment vs on gross profit: a 10% rate on collections arrives months later than on bookings.
Cap shock — "uncapped commission" in recruiting ads sometimes hides a soft cap via decelerators; ask for the full curve.
Double-counting team sales — overlapping credit (rep + manager + regional) can cost the company 1.5× on the same deal; clear crediting rules prevent both overpayment and disputes.

Frequently Asked Questions

How is commission calculated?

Flat: sales × rate — ¥200k at 4% = ¥8,000. Tiered (marginal): each bracket's rate applies only to sales within it — ¥150k with 3%-to-100k/5%-beyond = 3,000 + 2,500 = ¥5,500 (NOT 150k × 5% = 7,500 — that is "retroactive" tiers, a different and rarer plan; always read which one the contract says). Accelerators above 100% of quota (1.2-1.5×) are standard in SaaS comp plans.

Flat vs tiered — which motivates better?

Flat is simple but linear — effort plateaus near quota since the next yuan pays the same. Tiered/accelerated structures push past quota (the 5-8% kicker above 100% drives the famous Q4 sprint). Risk: sandbagging (holding deals into next period if THIS period's quota is missed) and gaming resets. Mitigate with per-deal rates or quarterly true-ups. The plan should make the company's best interest the rep's best interest — test every rule by asking "how would I game this?"

Why pay commission on margin instead of revenue?

Revenue-based plans reward discounting: the rep gives 20% off (costing the company most of its margin) and loses only 20% of commission. Margin-based commission (e.g., 15-25% of gross profit) makes discounts hurt the seller proportionally — discount discipline appears instantly. Also aligns multi-product mixes toward profitable SKUs. Cost: complexity, and reps need cost visibility. Common middle ground: revenue-based rate that scales with the deal's discount level.

How should quotas be set?

Standard: quota = territory potential × fair share, sanity-checked as 4-6× the on-target variable pay (¥20k/month variable → ¥80-120k monthly margin or revenue quota). Attainment distribution target: ~60-70% of reps hit quota — all hitting means quotas too low, 20% hitting means demoralization and attrition. Ramp new hires 2-4 months at reduced quota. Publish the formula: perceived fairness beats generosity for retention.

When is commission paid, and what are clawbacks?

Timing options: on booking (contract signed — fastest, riskiest), on invoicing, or on COLLECTION (cash received — standard where refunds/receivables risk exists). Clawbacks recover commission on cancellations/churn within a window (e.g., 90 days for annual SaaS prepay). Write it all in the plan document: payment trigger, clawback window, treatment of returns, split rules for team deals. Ambiguity here is the top commission dispute source.

What mistakes happen in commission plans?

(1) Retroactive vs marginal tier confusion (5,500 vs 7,500 on the same numbers); (2) paying on revenue while margins bleed from discounting; (3) quotas set top-down from the board target ÷ headcount (fantasy math) instead of territory reality; (4) mid-year plan changes (trust destruction — grandfather current-period terms); (5) no cap discussion (uncapped is fine IF accelerators are affordable — model the best case); (6) commission on uncollectable sales (pay on collection or claw back); (7) 100% commission roles for long-cycle sales (starvation churn — base salary covers the cycle length).

Typical commission rates by industry