OTE — on-target earnings — is the total cash a salesperson earns at exactly 100% of quota: base salary plus target variable pay. A job ad that says “$160,000 OTE, 50/50 split” means $80,000 of base salary and $80,000 of variable pay if the rep hits quota.
How OTE is calculated
The formula is a simple sum:
OTE = base salary + variable pay at 100% of quota
The variable part is usually expressed through a target commission rate, which is the variable target divided by the quota. With an $80,000 variable target and an $800,000 annual quota, the implied rate is 10%: every dollar of revenue at plan pays ten cents, and the rep earns exactly OTE at quota.
You can run your own numbers — including what the rep earns at 50%, 150% or 200% of quota — in the OTE calculator.
Pay mix: base versus variable
The pay mix is the split between base and variable at target, written base/variable: 50/50, 60/40, 70/30 and so on. The higher the variable share, the more of the rep’s pay is at risk and the more pay moves with results.
Pay mix is a design choice, not a law of nature. It usually reflects how much a salesperson can influence the outcome: roles that close deals directly tend to carry more variable pay than roles that support a sale or manage existing accounts. We do not publish “typical” pay mixes by role because we have no sourced data to back them; if you use a benchmark, check where it comes from and how recent it is.
What OTE does not tell you
OTE is the pay at one point of the curve — 100% of quota. Two plans with the same OTE can pay very differently elsewhere:
- Below quota: a plan with a threshold pays nothing until, say, 50% attainment; another pays from the first dollar.
- Above quota: accelerators increase the rate on revenue above quota; caps stop payouts at a ceiling.
- Realism of the quota: an OTE built on a quota few reps reach is not the pay most reps will see.
To compare plans properly, look at the whole payout curve with the pay curve calculator, and at a whole team with the commission plan simulator.
OTE and quota
Quota and OTE are linked through the commission rate. Raising quota without changing OTE lowers the rate per dollar; raising OTE without changing quota raises it. The quota-to-OTE ratio calculator shows quota as a multiple of OTE, which is a quick way to compare plans across roles or companies.
Key takeaways
- OTE = base + variable at 100% of quota.
- The implied commission rate is variable target ÷ quota.
- OTE says nothing about pay below or above quota: check thresholds, accelerators and caps.
- Compare plans on the whole curve and on a realistic distribution of attainment, not on OTE alone.
Frequently asked questions
Is OTE guaranteed?
No. Only the base salary is guaranteed (unless the plan includes a draw or a guarantee). The variable part depends on attainment and on the plan rules, so actual pay can be well below or well above OTE.
Does OTE include benefits or equity?
Usually not. OTE normally covers cash compensation only: base salary plus target commission or bonus. Check the offer letter, because definitions vary between companies.
What is the difference between OTE and total compensation?
OTE is a target set before the period starts. Total compensation is what was actually paid, which depends on attainment, accelerators, caps and clawbacks.