Sales Commission Calculator
Pay too little and you can't hire. Pay too much and you can't profit. Design a commission structure that attracts top performers while protecting your margins.
The commission structure dilemma
Most contractors either copy what competitors do (without knowing if it works) or wing it until a rep complains. Neither approach builds a winning sales team.
The right commission structure does three things: attracts talent, incentivizes the right behavior, and leaves enough margin for the business.
Typical Commission Structures
5-10% of job revenue
Simple but doesn't incentivize margin protection
15-25% of gross profit
Aligns rep incentives with company profitability
Higher % as volume increases
Rewards top performers, encourages growth
Design your commission structure
Model different structures and see the impact on rep earnings and company margins.
Job Economics
Revenue minus direct job costs (materials, labor, subs)
Commission Structure
Set to $0 for commission-only
Rep Total Compensation
Base Salary
Commission
Cost to Company
Cost as % of Revenue
Cost as % of GP
Rep Earnings at Different Volumes
Gross Profit commission aligns incentives Consider Gross Profit commission instead
Reps won't discount to close deals—they only earn more when the company earns more. Revenue-based commissions incentivize volume over profit. Reps may discount heavily to close.
Revenue vs. Gross Profit commission
The basis of your commission changes how reps behave. Choose wisely.
Revenue-Based
Commission on total job price
Example: Rep sells $100K job at 8% = $8,000 commission. If they discount 10% to close ($90K), they still make $7,200. They lose $800, you lose $10,000 in margin.
Gross Profit-Based
Commission on margin only
Example: $100K job at 35% margin = $35K GP. At 20% GP commission = $7,000. If they discount 10%, GP drops to $25K, commission drops to $5,000. They feel the pain too.
Industry benchmarks
What do top roofing and home services companies pay their sales teams?
Total Compensation
$80K-$150K
Cost as % of Revenue
6-12%
Includes base + commission + burden
Revenue Per Rep
$1M-$2M
Commission structure best practices
Keep it simple
If reps can't calculate their commission in their head, it's too complicated. Confusion kills motivation.
Pay frequently
Weekly or bi-weekly commission payments keep reps motivated. Monthly is too slow for hungry salespeople.
Reward tenure with tiers
Higher rates at higher volumes keeps your best reps from leaving. Make it expensive for them to start over elsewhere.
Clawback on cancellations
If the job cancels within 30-60 days, commission gets clawed back. Prevents "sell and run" behavior.
Include a base (usually)
100% commission attracts gamblers. A modest base attracts professionals who also want upside. $40-60K base is common.
Review annually
Market rates change. Your costs change. Review and adjust structures yearly—but honor existing commitments.
The dark side of commission-based pay
Commission structures are powerful motivators—but they come with real risks that many owners learn the hard way.
Inflated Egos
Top performers start believing they're the reason the company exists. They demand special treatment, undermine management, and create toxic cultures.
Warning sign: "I bring in more than my salary—you need me more than I need you."
Hard to Fire
High earners become untouchable. They have customer relationships and institutional knowledge you can't easily replace—and they know it.
Warning sign: Tolerating behavior from top reps you'd never accept from anyone else.
Leads to Greed
Commission-only minds optimize for closing—not for what's right. Overselling, pressuring customers, and cutting corners to close faster.
Warning sign: Callbacks and complaints spike with your "best" closer.
Build a system, not a star
The best sales organizations aren't built on superstars—they're built on repeatable processes that make any rep successful. This is also what acquirers demand.
Documented Sales Process
Every step from first contact to signed contract—scripted, recorded, and refined. New reps follow the playbook. No guessing, no "feel."
Structured Training Program
Week-by-week onboarding curriculum. Product knowledge tests. Ride-alongs with metrics. Ramp time becomes predictable—not dependent on "natural talent."
Company-Owned CRM Data
All leads, notes, and customer history live in your system—not a rep's head or personal phone. Round-robin lead assignment. No territory ownership.
SOPs for Everything
Objection handling scripts. Proposal templates. Follow-up cadences. When everything's documented, anyone can step in and perform.
What acquirers demand—and pay premium for
Private equity and strategic buyers discount businesses built on individual salespeople. They pay premium multiples for documented, repeatable sales systems where any competent hire can produce results. Your top rep leaving shouldn't mean 30% of revenue walks out the door.
How ContractorHUB helps you manage sales compensation
Track performance, calculate commissions automatically, and keep your team motivated.
Sales Leaderboards
Real-time rankings by revenue, GP, close rate. Healthy competition drives performance.
Commission Calculator
Configure your structure once. Commissions calculate automatically from closed jobs.
Rep Performance Dashboard
Each rep sees their own numbers: pipeline, closed, commission earned, YTD progress.
Commission Reports
Export-ready reports for payroll. No more spreadsheet calculations.
Tiered Structure Support
Configure unlimited tiers. System tracks thresholds and applies correct rates automatically.
Clawback Tracking
Automatically flag and calculate clawbacks when jobs cancel within your defined window.
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Ready to build a winning sales team?
See how ContractorHUB can help you track performance, calculate commissions, and keep your team motivated.