Commission Calculator

What more written premium is worth to your agency

Your agency earns commission on the premium it writes, and again every year an account renews. Put in your own numbers, take out the producer's share, the business you'd have written anyway and what the system costs, and see what's left for the agency.

Your numbers

Conservative example Replace with your numbers.

Active x-dates and prospects your team follows up on.
%
Share you write when followed up on time.
$
Your typical new account.
%
Your blended rate on new business.
%
Leave blank to use the new-business rate.
%
Share of accounts that renew each year.
yrs
Whole years, 1 to 10.

What comes out of it

Leave these at zero to see gross commission only.

%
The share of commission on these accounts, first year and renewals, that goes to the producer.
$
A year of monthly plan, CRM seats and other software. Subtracted every year.
New accounts a year you'd write without the new system. These don't count toward the results.
New premium per year$36,0006 extra accounts a year
Gross commission, year 1$4,320at 12% commission, before producer share and costs
Producer share, year 1$1,72840% of the commission on these accounts
Net to the agency, year 1−$408after producer share and $3,000 of annual cost
Net to the agency over 3 years$5,055$23,425 gross, with 85% of accounts renewing each year
Break-even new premium$41,667a year of new premium to cover $3,000: about 6.9 accounts at $6,000
Gross commission each year
YearGross commissionProducer shareCostsNet to agencyRunning net
1$4,320−$1,728−$3,000−$408−$408
2$7,992−$3,197−$3,000$1,795$1,387
3$11,113−$4,445−$3,000$3,668$5,055

How this is calculated

  1. Accounts from follow-up = x-dates worked × close rate.60 × 10% = 6 accounts
  2. Extra accounts a year = those accounts, minus the ones you'd have written anyway. Only the extra accounts count.6 − 0 = 6 accounts
  3. New premium a year = extra accounts × average annual premium.6 × $6,000 = $36,000
  4. Gross commission in year 1 = new premium × your new-business commission rate.$36,000 × 12% = $4,320
  5. Each later year, your team writes the same amount of new business again, and every earlier group of accounts renews at your retention rate and pays your renewal commission rate (12%). A group written in year 1 keeps 85% of its premium in year 2, 72.3% in year 3, and so on.
  6. Producer share = gross commission × 40%. Net to the agency = gross commission − producer share − your annual cost.Year 1: $4,320 − $1,728 − $3,000 = −$408
  7. Break-even new premium is the new premium you'd need to write in a year so that its first-year commission, after the producer's share, covers the cost: cost ÷ (commission rate × the share the agency keeps).$3,000 ÷ (12% × 60%) = $41,667

The math assumes the same activity every year and no rate increases or premium growth. It leaves out contingency and profit-sharing income and your staff's time. A one-time fee works the same way as the break-even line: at a 12% commission, a $3,000 fee pays for itself at $25,000 of new premium, about four $6,000 accounts.