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Target payout mechanics

Bonus Payout Calculator

Estimate target bonus payout using target bonus, company factor, performance multiplier, proration and payout cap. This page is for plan mechanics, not simple salary percentage only.

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Last reviewed 20 August 2026

Threshold, target and stretch: the three numbers that decide a payout

Most bonus plans convert results into a payout using three anchor points. Threshold is the minimum result at which anything pays — below it the payout is zero, not reduced. Target is the expected result and pays 100%. Stretch is the maximum recognised result and pays the capped maximum, usually 150–200% of target.

Payout = Target bonus × Payout factor (from the curve) × Eligibility, then capped

Everything between the anchors is interpolated. The steepness between threshold and target is what makes the difference between a plan that feels fair and one that feels arbitrary.

Go to the calculator ↓or keep reading for the formula
Estimated bonus payout
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Target bonus before factors
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Educational estimate only. This is not payroll, tax, legal or HR advice.

Examples

ScenarioFormulaUse case
Company factorTarget × company %Company performance adjusts payout.
Prorated payoutTarget × eligibility %New hire, leaver or partial period.
Capped payoutMin(raw payout, cap)Plans that limit upside.

Related tools and next steps

Bonus multiplier calculator
Solve multiplier or final payout.
STIP calculator
Scorecard based incentive payout.
Annual bonus calculator
Annual target bonus payout.

What the curve looks like

A $20,000 target bonus on a plan paying nothing below 90% of goal, 50% of target at threshold, 100% at target, and 200% at 120% or above.

89% of goal
Nil
90% (threshold)
$10,000
100% (target)
$20,000
110%
$30,000
120%+ (cap)
$40,000
The threshold cliff is worth $10,000 for a one-percent difference in results.
The cliff at threshold is the most important number in the plan. Moving from 89% to 90% of goal is worth $10,000. Moving from 100% to 110% is worth the same $10,000 for ten times the extra performance. If you are near threshold in the final quarter, that is where the entire economic value of your effort sits.

The order operations are applied in

1
Funding gate. If company results miss the funding threshold, the pool is zero and nothing below matters.
2
Payout factor from the curve. Your result converted to a percentage of target.
3
Individual modifier. Applied as a multiplier or as a weighted component, depending on plan design.
4
Eligibility and proration. Partial years scale everything down.
5
Cap. Always last, and normally against the prorated target.

Read the payout curve guide, or use the STIP calculator for scorecard plans and the multiplier calculator to work backwards from a payslip.

Bonus payout questions

What is a bonus payout calculator?

It estimates the final payout from a target bonus, performance multiplier, company factor, proration and payout cap.

How is this different from bonus pay?

Bonus pay is usually salary times a percentage. Bonus payout handles plan mechanics such as multipliers, caps and eligibility.

Does this calculate tax?

No. It estimates gross payout before payroll deductions.

What is the difference between threshold, target and stretch?

Threshold is the minimum result at which any bonus pays, commonly 80-90% of goal, and below it the payout is zero rather than reduced. Target is the expected result and pays 100% of the target bonus. Stretch is the maximum recognised result, often 120% of goal, paying the capped maximum of 150-200%.

How is a bonus payout calculated?

Target bonus multiplied by the payout factor from the plan curve, then by any individual modifier and eligibility fraction, with the cap applied last. The payout factor is what the curve converts your result into.

What happens if I miss the threshold?

Nothing pays for that component. A threshold is a cliff, not a slope - missing it by one percent produces the same result as missing it by twenty.

What is a typical bonus cap?

Between 150% and 200% of target for most cash bonus plans. The cap is applied after every multiplier, and normally against the prorated target rather than the full-year target.

Is the payout curve always linear?

Not necessarily. Linear interpolation between anchor points is the most common, but stepped bands and steeper curves above target are both widely used. The plan document should state the interpolation method.

Reviewed 20 August 2026 by the BonusPayCalc editorial team. Gross planning estimates only — not payroll, tax, legal or HR advice. See methodology for how formulas are chosen, or report a correction.