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How to calculate a performance bonus in Excel and Google Sheets
Excel & Google Sheets
=A2*IF(B2>="Excellent",0.15,IF(B2="Good",0.1,IF(B2="Meets Expectations",0.05,0)))✓
Verified example
Computed by a real spreadsheet engine on the sample data below.
| Base Salary | Rating | Bonus |
| 80000 | Excellent | |
| 60000 | Good | |
| 55000 | Meets Expectations | |
| 45000 | Below Expectations |
=A2*IF(B2>="Excellent",0.15,IF(B2="Good",0.1,IF(B2="Meets Expectations",0.05,0)))→12000
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Step by step
- 1Column A = Base Salary, Column B = Performance Rating (text: Excellent, Good, Meets Expectations, Below Expectations).
- 2In C2 enter: =A2*IF(B2="Excellent",0.15,IF(B2="Good",0.1,IF(B2="Meets Expectations",0.05,0)))
- 3Adjust the percentages (0.15, 0.1, 0.05) to match your company's bonus policy.
- 4For numeric ratings (1–5), replace text comparisons with >=4, >=3, etc.
Tips
- For cleaner formulas, store the bonus tiers in a lookup table and use VLOOKUP or XLOOKUP instead of nested IFs — much easier to maintain when tiers change.
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Frequently asked
How do I calculate bonus on target earnings rather than base salary?
Replace A2 with the target earnings cell. The rest of the formula stays the same.
Can I cap the bonus at a maximum amount?
Yes — wrap the formula with MIN: =MIN(50000, A2*IF(B2="Excellent",0.15,…)).