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Draw Against Commission Definition
Use our free Draw Against Commission Calculator to quickly figure out your sales goals and commission checks.
What is a Draw Against Commission?
A draw against commission is a paycheck made against future commission earnings. If you have a sales jobs that is paid completely or mostly on commission, you may be paid an advance draw against a possible commission to give you money to live on until your commission is paid. Many states also mandate that you must be paid a set number of times per month, which may not match up with your commission period.
Unlike regular salary, a draw against commission is effectively a zero-interest loan: if you do not earn enough to cover the draw, you may be forced to repay the draw to your employer. This calculator will help you to set sales goals to avoid this possibility.
How the Calculator Works
Every job has its own rules governing how you will be paid. Some jobs may have a base salary, while others are completely commission-based. This calculator is capable of handling all the calculations to give you a concise sales goal. The calculator will also help you figure out what your commission check will be after paying back the advance draw.
The Draw Against Commission Calculator accepts the following parameters:
Amount drawn on commission (monthly)
Monthly base salary
Total sales for the month
All fields assume a monthly sales period. Before using the calculator, you’ll need to convert all of your figures into a month-based format. If your commission is paid out quarterly, you’ll need to divide your total sales by three. If your base salary is paid twice a month, double that figure. The commission rate is formatted in decimals: if you are paid 15 percent of sales, enter .15 into this field.
After submitting your numbers, you will receive two figures. The first will tell you how many dollars worth of sales you will need to cover your draw. The second will tell you what your commission check will be after repaying your draw.
Bonuses and Other Complications
Many businesses offer performance incentives, which may result in variable commission rates or special bonus money. Depending on how your employer categorizes these bonuses, they may or may not factor into your commission totals. Consider the following items:
Did you hit your sales quota? Many businesses increase your commission rate for hitting quota.
Does your employer offer bonus commission? Some businesses give salespeople an extra few percentage points for sales well above their sales quota.
Are you counting performance-based spiffs in your calculations? Spiffs are generally not considered part of your commission and will not count towards paying down your draw.
Do you owe anything for unpaid draws? If you failed to cover your draw in a previous month, the company may take the difference out of your current commission check.
Try the Draw Against Commission Calculator now! Check out all our calculators for other helpful tools.
How to Calculate Draw Against Commission
Let's be honest - sometimes the best draw against commission calculator is the one that is easy to use and doesn't require us to even know what the draw against commission formula is in the first place! But if you want to know the exact formula for calculating draw against commission then please check out the "Formula" box above.
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