How To
How to calculate agency commission
Agency commission is a service fee applied to the base media cost before invoicing. There are two ways to frame it: added on top of the base (additive), or included in the total (subtractive — you start from the invoiced total and work back to the base). Which one applies depends on market convention and agency practice.
Method 1: Additive — commission on top
Total (Invoiced)
Base × (1 + commission%)
Commission is added on top of the base cost: Base + 10% means multiplying by 1.10. This is straightforward and widely used in markets where commission is treated as a surcharge.
| Variable | Value |
|---|---|
| Base cost | $5,000 |
| Commission rate | 10% |
| Calculation | $5,000 × 1.10 (Base + 10%) |
| Total (invoiced) | $5,500.00 |
| Commission amount | $500.00 |
The commission is measured against the white column: 10% of the $5,000 base, stacked on top.
Additive: Base + 10% → × 1.10. The commission is 10% of the base, not of the total.
Method 2: Subtractive — commission included
Base Cost
Total × (1 − commission%)
Here the calculation runs in reverse: you start from the invoiced total, which already includes the commission. A $6,000 invoice that includes 10% commission: 1 − 10% = 90%, so the base is 90% of the total and the commission is the included 10%. This is common in markets following traditional media agency practice (e.g. the UK, Australia).
| Variable | Value |
|---|---|
| Total (invoiced) | $6,000 |
| Commission rate (included) | 10% |
| Calculation | $6,000 × 0.90 (1 − 10% = 90%) |
| Base cost | $5,400.00 |
| Commission amount | $600.00 |
Start from the $6,000 total: 1 − 10% = 90% leaves the $5,400 base. The sage slice is the commission already included in the invoice.
Subtractive: 1 − 10% = 90%. $600 ÷ $6,000 = exactly 10% of the total — the commission is included in it.
The same $6,000 invoice, two framings
| Rate | Additive — commission on the base | Subtractive — commission in the total |
|---|---|---|
| 10% | $545.45 base $5,454.55 | $600.00 base $5,400.00 |
| 15% | $782.61 base $5,217.39 | $900.00 base $5,100.00 |
| 20% | $1,000.00 base $5,000.00 | $1,200.00 base $4,800.00 |
Commission contained in a $6,000 invoice. For the same stated rate, the subtractive framing always contains a larger commission than the additive one.
Try the Commission calculator
Additive: base + commission on top. Subtractive: enter the total and work back to the base.