What does the GM Income Calculator measure?

It estimates monthly revenue, gross margin dollars, commission expense, pre-tax profit, taxes, and net income.

Is the commission based on revenue or margin?

In this tool, commission is on revenue. If you pay on margin, adjust the commission formula accordingly.

How do I enter percentages?

Use whole numbers like 25 for 25%, not 0.25.

What happens if pre-tax profit is negative?

Taxes become zero, and net income equals the loss.

Can I include variable costs other than margin?

Variable costs should be reflected in the gross margin %. Fixed costs go in Fixed Monthly Costs.

Does it handle tiered or capped commissions?

No. It assumes a single rate; run scenarios for tiers or caps.

Are results before or after cash timing?

Results are accrual-style estimates; they do not model cash timing or collection delays.

GM Income Calculator — Revenue, Margin, Commission, and Net Income

Quick start: Enter monthly units, average sale price, gross margin %, commission %, fixed monthly costs, and tax rate. The calculator estimates revenue, gross margin dollars, commission, pre‑tax profit, taxes, and net income.

How It Works

Inputs (monthly): units sold, average sale price ($), gross margin (%), commission rate (%), fixed monthly costs ($), and tax rate (%).
Outputs: revenue, gross margin amount, commission expense, pre‑tax profit, taxes (only if profit is positive), and net income.
What moves results most: price, volume, margin %, and commission %. Fixed costs set the break‑even. Tax only applies when pre‑tax profit is positive.

Formula / Method

Revenue = units × average sale price
Gross margin ($) = revenue × (gross margin % / 100)
Commission = revenue × (commission % / 100)
Pre‑tax profit = gross margin ($) − commission − fixed costs
Taxes = max(pre‑tax profit, 0) × (tax rate % / 100)
Net income = pre‑tax profit − taxes

Units in dollars for money; percentages entered as whole numbers (e.g., 25 for 25%).

Worked Example

Inputs:

Units: 50 per month
Average sale price: $1,200
Gross margin: 25%
Commission: 5%
Fixed monthly costs: $3,000
Tax rate: 20%

Results:

Revenue = 50 × $1,200 = $60,000
Gross margin ($) = $60,000 × 25% = $15,000
Commission = $60,000 × 5% = $3,000
Pre‑tax profit = $15,000 − $3,000 − $3,000 = $9,000
Taxes = $9,000 × 20% = $1,800
Net income = $9,000 − $1,800 = $7,200

Applications

Sales comp planning: Test commission rates and margin floors before finalizing plans.
Pricing decisions: See how a price change impacts profit after commission.
Monthly forecasting: Combine known fixed costs with sales assumptions to check runway.

Assumptions & Limitations

Gross margin % is on revenue, not on cost.
Commission is calculated on revenue (top‑line). If your plan pays on margin, adjust accordingly.
Tax applies only when pre‑tax profit is positive.
No timing effects (cash vs accrual) and no tiered commissions or deductions beyond fixed costs.

Tips / Common Mistakes

Enter percentages as whole numbers (e.g., 8, not 0.08).
Match commission base: If you pay on margin, replace commission formula with margin‑based commission.
Include all fixed costs that recur monthly (salaries, rent, software). Exclude one‑time items.
For negative pre‑tax profit, taxes are zero; net income will equal the loss.

Risk/Note

Tiered or capped commissions, spiffs, and chargebacks are not modeled. Results will differ if those apply.
If margin % varies by product, use a weighted average or run scenarios.

Inputs & Units

Units Sold: count per month
Average Sale Price: dollars per unit
Gross Margin (%): percent of revenue
Commission Rate (%): percent of revenue
Fixed Monthly Costs: dollars per month
Tax Rate (%): percent of pre‑tax profit

Gm Income Calculator

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