Skip to content
Commission Index

Marginal vs retroactive tiers

Tiered commission calculator

Build your ladder by revenue or by % of quota and see, on the same revenue, what each slice earns under marginal tiers and what everything earns under retroactive tiers — with the dollar gap between the two.

Updated 2026-10-16 · Independent expert review pending · Free, no sign-up

Inputs

How tiers pay

Each slice of revenue is paid at its own tier rate.

Commission tiers
#From %Up to (exclusive) %Rate %Remove
1
2
3and above
Splits & clawbacks

Result

  • Tier 1 · $250,000.00 × 4% $10,000.00
  • Tier 2 · $250,000.00 × 8% $20,000.00
  • Tier 3 · $60,000.00 × 12% $7,200.00
Commission payout $37,200.00

engine v0.1.0 · rounding half up, 2 dp at payout

Effective rate
6.64%
Quota attainment
112%

Marginal vs retroactive on the same inputs

Marginal (graduated)

$37,200.00

Retroactive

$67,200.00

Retroactive pays $30,000.00 more on this revenue.

Payout across revenue levels Marginal (graduated)Retroactive
$5K$5K25%$10K$20K50%$20K$30K75%$30K$60K100%$45K$75K125%$60K$90K150%$75K$105K175%$90K$120K200%
Data table
Payout across revenue levelsMarginal (graduated)Retroactive
25%$5K$5K
50%$10K$20K
75%$20K$30K
100%$30K$60K
125%$45K$75K
150%$60K$90K
175%$75K$105K
200%$90K$120K

The link stores plan settings only — never names or deal lists.

Worked example

Quota $500,000.00. The plan pays 4% up to 50% of quota, 8% from 50% to 100% and 12% above quota. The rep closes $560,000.00 (112% of quota).

TierRevenue in tierRateMarginal
Tier 1 $250,000.00 4% $10,000.00
Tier 2 $250,000.00 8% $20,000.00
Tier 3 $60,000.00 12% $7,200.00
Marginal payout$37,200.00
Retroactive payout$560,000.0012%$67,200.00

Same ladder, same revenue: retroactive tiering costs $30,000.00 more for this rep. Effective rates: 6.64% marginal vs 12% retroactive.

The retroactive cliff

Under the retroactive version of this plan, a rep at $499,999.99 earns $40,000.00. One cent more — exactly $500,000.00, 100% of quota — earns $60,000.00: a jump of $20,000.00 for one cent of revenue. Thresholds are inclusive at the lower bound in this calculator ([from, to)); check how your plan document defines them.

Designing tiers

  • Start at 0 and keep tiers contiguous. Gaps and overlaps are the most common source of disputes; the calculator rejects them.
  • Prefer % of quota thresholds when reps have different quotas — the same ladder then fits everyone.
  • Choose marginal unless you want cliffs. Retroactive tiers can motivate a final push, but they also invite sandbagging and deal timing games.
  • Price the plan on a team before rolling it out: run it in the plan simulator against your current plan.
  • For a single multiplier above quota, the accelerator calculator is simpler.

Frequently asked questions

What is a tiered commission structure?

A plan where the commission rate changes as revenue or quota attainment crosses thresholds. Higher tiers usually pay higher rates to reward overperformance, but a plan can also pay less in lower tiers (a decelerator).

Is "graduated" the same as "marginal"?

Yes. Graduated, marginal or cumulative tiers all mean each slice of revenue earns the rate of the tier it falls in, like income tax brackets.

Why does retroactive tiering create cliffs?

Because crossing a threshold re-prices every dollar already sold. One extra dollar can raise the payout by thousands, which encourages deal timing games right below thresholds.

Which is cheaper for the company?

With rates that rise from tier to tier, marginal tiers always pay less than or the same as retroactive tiers on the same revenue. Use the plan simulator to see the cost on a whole team.

Learn the concepts

Guides

Keep going

Outgrowing the spreadsheet?

Six questions to see whether commission software is worth it for your team — including when it is not.

Take the software check →