Work, pay & shifts
Progressive vs Bracket Commission Tiers
Two commission plans can print the identical tier table — 5% up to $50,000, 7% from $50,000, 10% from $100,000 — and still pay very different amounts on the same sales. The difference is whether a higher tier’s rate applies only to the sales inside that tier, or to every dollar once the tier is reached. This guide compares the two readings, shows where they diverge, and explains how to tell which one your plan uses.
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Two ways to read one tier table
Progressive tiers (also called marginal or incremental) work like income tax brackets: each slice of sales earns its own tier’s rate. Reaching a new tier raises the rate only on the sales above that threshold.
Bracket tiers (also called flat, retroactive, or “all-sales” tiers) pay one rate on everything: the rate of the highest tier reached. Crossing a threshold re-rates every dollar sold in the period, including the ones already counted.
Side by side at different sales levels
The same three tiers — 5% from $0, 7% from $50,000, 10% from $100,000 — at six sales levels:
| Net sales | Progressive | Bracket |
|---|---|---|
| $40,000 | $2,000.00 | $2,000.00 |
| $60,000 | $3,200.00 | $4,200.00 |
| $99,999.99 | $6,000.00 | $7,000.00 |
| $100,000 | $6,000.00 | $10,000.00 |
| $120,000 | $8,000.00 | $12,000.00 |
| $150,000 | $11,000.00 | $15,000.00 |
While sales stay in Tier 1 the two methods agree. Once a threshold is crossed, bracket tiers always pay at least as much as progressive ones, because the top rate reached is applied to every dollar.
The cliff at each threshold
Progressive commission rises smoothly: one more dollar of sales adds one dollar times the current tier’s rate. Bracket commission jumps. At $49,999.99 of sales it is $2,500.00; at $50,000 it is $3,500.00 — $1,000 more for one cent. At the next threshold the jump is $3,000: $7,000.00 at $99,999.99, $10,000.00 at $100,000.
Those cliffs change behaviour. A salesperson just short of a threshold has a strong reason to pull a deal into this period, and a single return that drops sales below a threshold can cost far more than the return’s own value times the rate.
Which one is your plan?
- Wording like “on sales above $50,000” or “for sales between $50,000 and $100,000” usually means progressive tiers.
- Wording like “once you reach $100,000, you earn 10% on all sales” or “retroactive to the first dollar” means bracket tiers.
- If the plan document includes a worked example, recompute it both ways — only one will match.
- Check how the threshold itself is treated: “from $50,000” includes exactly $50,000; “over $50,000” does not.
Why a company might choose either
- Progressive tiers cost less at the same rates, have no cliffs, and are easier to forecast.
- Bracket tiers create a strong push toward each threshold and are simple to state, but they reward timing as much as selling, and returns near a threshold get complicated.
- Some plans mix the two — progressive within a period, with a one-off bonus for reaching a threshold. Model the bonus separately.
Progressive vs Bracket Tiers FAQ
- Is progressive commission the same as marginal commission?
- Yes. Progressive, marginal, and incremental all describe tiers where each slice of sales earns its own rate.
- Which method pays more?
- With rates that rise from tier to tier, bracket tiers pay at least as much as progressive tiers on the same sales — and much more just above a threshold. Below the first threshold they pay the same.
- Do tiers reset every period?
- Usually — most plans count sales per month, quarter, or year and start again from Tier 1. Your plan states the period.
- What happens to a bracket commission if a sale is returned?
- If the return takes sales below a threshold, the lower rate applies to all sales again. On $100,000 of sales, a $1 return under the tiers above takes commission from $10,000.00 to $6,999.93 — $3,000.07 less for $1 of sales.
- Can a plan use different methods for different tiers?
- Yes. Some plans pay the first tiers progressively and add a bracket-style bonus for passing quota. Treat each part separately and add them together.
Related guides
- Designing Commission TiersSet tier thresholds and rates for a sales commission plan: start from target pay, test the cost at low, expected, and high sales, and write the edge cases down before anyone is paid.
- Accelerators and QuotaHow quota attainment works, how to turn attainment-based tiers into dollar thresholds, and what a commission accelerator above quota is actually worth at different sales levels.
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