On-Target Earnings (OTE)
OTE (on-target earnings) is the total pay an employee can expect in a year if they hit 100% of their targets. It is base salary plus variable pay, usually commission or bonus. OTE is standard in sales job offers, where a role might be advertised as "$80k base, $160k OTE". It is a projection, not a guarantee.
Also known as: on target earnings, on-target earnings, ote salary, ote meaning
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Key takeaways
- OTE (on-target earnings) is base salary plus the variable pay you earn at 100% of target.
- It is standard in sales offers: a role might be “$80k base, $160k OTE.”
- The split (base vs variable) is what matters: 50/50 is far riskier than 80/20.
- OTE is a projection, not a guarantee; only the base is guaranteed.
At a glance
- Formula
- Base salary + variable at 100% of target
- Common splits
- 50/50, 60/40, 80/20 (base/variable)
- Guaranteed?
- Only the base
- Related
- Gross pay, retention bonus, KPIs
Why does OTE matter?
OTE is the number candidates compare, but it hides the real risk: how much of it is guaranteed. Two roles with the same OTE can be very different jobs if one is 80% base and the other is 50%. For companies, the split signals how much of the role's success depends on the individual versus the team or product.
How does OTE work?
OTE = base salary + variable pay at 100% of target
Common splits (base / variable):
- 50/50: new business account executives
- 60/40 or 70/30: account managers, mid-market sales
- 80/20 or higher: customer success, sales engineering
Many plans add accelerators, which pay a higher commission rate above 100% of target, so actual earnings can exceed OTE.
Worked example
An account executive has an $80,000 base and $80,000 variable on a $800,000 annual quota. OTE is $160,000. If she closes $600,000 (75% of quota) on a linear plan, she earns $80,000 + $60,000 = $140,000.
Frequently asked questions
- Is OTE guaranteed?
- No. Only the base is guaranteed. OTE assumes you hit 100% of target.
- What questions should I ask about an OTE offer?
- What percentage of the team hit quota last year, whether there is a cap, how quota is set, and when commission is paid.
- How do you calculate OTE?
- Add base salary and the variable pay earned at 100% of target. An $80k base with $80k variable is $160k OTE.
- What is a good OTE split?
- It depends on the role. 50/50 suits new-business sales; 70/30 or 80/20 suits account management or customer success, where more pay should be guaranteed.
- What is the difference between OTE and base salary?
- Base is the fixed, guaranteed pay. OTE adds the variable pay you would earn at 100% of target, so OTE is always higher than base.
- What is accelerator pay?
- A higher commission rate paid above 100% of target, so top performers can earn more than their OTE.
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