Enter the sales amount and commission rate into the calculator to determine the draw commission; this calculator can also evaluate any of the variables given the others are known.
Draw Commission Formula
The following formula is used to calculate the draw commission:
DC = (S * R) / 100
Variables:
- DC is the draw commission
- S is the sales amount
- R is the commission rate
To calculate the draw commission, multiply the sales amount by the commission rate and divide the result by 100.
What is a Draw Commission?
A draw commission is a type of compensation structure often used in sales roles where an employee receives a predetermined amount of money, known as a “draw,” at the beginning of a pay period. This draw is then deducted from the commission they earn during that period. If the employee does not earn enough commission to cover the draw, they may owe the company the difference, depending on the company’s policy. This system is designed to provide income stability for commission-based employees, while also incentivizing them to generate sales. However, it can also lead to debt if the employee consistently fails to earn enough commission.
How to Calculate Draw Commission?
The following steps outline how to calculate the Draw Commission.
- First, determine the total sales ($).
- Next, determine the commission rate (%).
- Next, multiply the total sales by the commission rate to calculate the commission amount.
- Finally, subtract the commission amount from the total sales to calculate the Draw Commission.
- After inserting the variables and calculating the result, check your answer with the calculator above.
Example Problem:
Use the following variables as an example problem to test your knowledge.
total sales ($) = 500
commission rate (%) = 10
