Enter the total commission earned and the recovery rate into the calculator to determine the commission draw. This calculator can also evaluate any of the variables given the others are known.
Commission Draw Formula
The following formula is used to calculate the commission draw.
CD = (C * R) - D
Variables:
- CD is the commission draw ($)
- C is the total commission earned ($)
- R is the recovery rate (decimal)
- D is the draw amount ($)
To calculate the commission draw, multiply the total commission earned by the recovery rate. Then subtract the draw amount from the result.
What is a Commission Draw?
A commission draw is a type of salary advance that companies give to their commission-based employees. It’s a fixed amount of money that employees receive regularly, typically every pay period, to help them manage their finances while they work towards earning their commissions. This draw is then deducted from their future commissions until it’s fully paid back. It’s often used in sales jobs where income can fluctuate greatly based on performance.
How to Calculate Commission Draw?
The following steps outline how to calculate the Commission Draw.
- First, determine the total commission earned ($).
- Next, determine the recovery rate (decimal).
- Next, determine the draw amount ($).
- Next, gather the formula from above = CD = (C * R) – D.
- Finally, calculate the Commission Draw.
- After inserting the variables and calculating the result, check your answer with the calculator above.
Example Problem :
Use the following variables as an example problem to test your knowledge.
total commission earned ($) = 500
recovery rate (decimal) = 0.75
draw amount ($) = 200
