---
title: "On-Target Earnings (OTE)"
description: "OTE means on-target earnings: base salary plus the variable pay you earn if you hit 100% of target. See the formula, common splits, and a worked example."
url: "https://sageo.ai/glossary/ote"
source: "Sageo (sageo.ai)"
---


# 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

## 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.