What is OTE?

OTE stands for On-Target Earnings. It represents the total compensation a sales rep can expect when they achieve 100% of their quota. OTE combines base salary and the variable (commission) component, giving both reps and employers a clear picture of total expected pay.

How OTE is Calculated

OTE is derived from the base salary and the pay mix ratio. If a rep has a $75,000 base salary with a 60/40 pay mix, the base represents 60% of total compensation. That means OTE equals $75,000 divided by 0.60, which is $125,000. The remaining $50,000 is the variable component earned through commissions at 100% quota attainment.

OTE = Base Salary / (Base % / 100)

Variable = OTE - Base Salary

Common Pay Mix Structures

50/50 Split

Equal weight on base and variable. Common in transactional sales roles with shorter cycles. High earning potential but more income variability.

60/40 Split

The most common pay mix in SaaS and technology sales. Provides a solid base with meaningful upside. Balances security with performance incentives.

70/30 Split

Higher base proportion, typical for enterprise sales with long cycles or customer success roles. Lower income variability with moderate upside.

80/20 Split

Heavily base-weighted, common in account management or post-sale roles. Provides stability with a smaller performance bonus component.

Frequently Asked Questions

Is OTE guaranteed?

No. OTE is not guaranteed income. The base salary portion is guaranteed, but the variable component depends on reaching quota. OTE represents what you earn at exactly 100% quota attainment.

What pay mix is best for sales reps?

The ideal pay mix depends on the role and sales cycle. A 60/40 split is the industry standard for most SaaS sales roles. Reps in transactional roles may prefer 50/50 for higher upside, while enterprise reps often prefer 70/30 for stability.

Can you earn more than OTE?

Yes. OTE is the target, not the cap. Reps who exceed 100% quota continue earning variable compensation. With accelerators, earnings above quota can significantly exceed OTE.

How do I negotiate OTE?

Focus on the base salary first, as it is guaranteed income. Then evaluate the quota attainability by asking about historical attainment rates. A high OTE with unrealistic quotas is worth less than a moderate OTE with achievable targets.

What is a quota coverage ratio?

The quota coverage ratio compares your variable compensation to your quota. It answers: for every dollar of quota, how many cents do you earn in commission? A higher ratio means each dollar sold earns you more.

How does attainment affect OTE?

Below 100% attainment, the variable component scales linearly. At 80% attainment, you earn 80% of your target variable. At 120% with a 1.5x accelerator, you earn 130% of your target variable (100% + 20% at 1.5x).

OTE Calculator