To calculate the 70/30 split compensation plan, multiply the annual salary by 0.7 (representing the 70% fixed salary), then divide the result by the number of months to determine the monthly pay.
70/30 Compensation Plan Calculator
A 70/30 compensation plan is a widely-used structure in which 70% of a person’s compensation comes from base salary and 30% comes from variable or performance-based earnings, such as sales commissions. This plan is common in sales roles where a portion of earnings is fixed, while the remaining depends on performance metrics like sales or targets.
Formula:
The formula to calculate monthly pay under this plan is:
MP = (0.7 × S) / n
Where:
- MP is the monthly pay from the base salary,
- S is the annual salary,
- n is the number of months (typically 12 for a yearly salary).
For example, if a person’s annual salary is $100,000, the 70% base salary is $70,000, which is divided into monthly installments.
Solved Calculations:
Example 1:
Calculation | Instructions |
---|---|
Given: Annual Salary = $120,000, n = 12 | Start with the annual salary and number of months. |
MP = (0.7 × 120,000) / 12 | Multiply the salary by 0.7. |
MP = 84,000 / 12 | Divide by the number of months. |
MP = $7,000 | The monthly pay is $7,000. |
Answer: The monthly base pay under the 70/30 plan is $7,000.
Example 2:
Calculation | Instructions |
---|---|
Given: Annual Salary = $80,000, n = 12 | Start with the annual salary and number of months. |
MP = (0.7 × 80,000) / 12 | Multiply the salary by 0.7. |
MP = 56,000 / 12 | Divide by the number of months. |
MP = $4,666.67 | The monthly pay is $4,666.67. |
Answer: The monthly base pay under the 70/30 plan is $4,666.67.