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Commish › What is OTE?

What is OTE?

OTE stands for on-target earnings: your base salary plus the variable pay you earn when you hit exactly 100% of quota. A $90,000 base and $90,000 in target commission is a $180,000 OTE.

What OTE includes

  • Base salary: the guaranteed part, paid regardless of results.
  • Variable pay at target: commission or bonus you earn at 100% of quota.
  • What it leaves out: accelerators above quota, equity, benefits and anything you earn below quota.

What OTE doesn't tell you

OTE is a target, not a promise. Two offers with the same OTE can be very different if one has a 70/30 mix and an achievable quota, and the other is 50/50 with a quota most reps miss. Ask what share of the team hit 100% last year and what the average rep actually earned.

Formula

OTE = Base salary + Variable pay at 100% of quota

Example

Offer: $90,000 base, $180,000 OTE, $900,000 quota.

Variable at target is $90,000, a 50/50 mix. Quota is 5.0x OTE, and the implied rate is 10% of sales. At 80% of quota on a straight-line plan you'd earn $90,000 + $72,000 = $162,000.

Try it with your numbers

OTE calculator

Estimated commission

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Results are estimates for planning only. Your employer's compensation plan governs actual payouts, including any floors, caps, credit rules and timing.

Common questions

Is OTE the same as salary?

No. Salary is only the base. OTE adds the variable pay you'd earn at 100% of quota, so it's the expected total if you hit your number.

Does OTE include accelerators?

No. OTE is defined at exactly 100% of quota. Accelerators only affect pay above quota, which is why top performers can earn well above OTE.

What's a good OTE?

It depends on role, industry, deal size and location. Judge an OTE alongside the pay mix, quota-to-OTE ratio and how many reps actually reach quota.

Is OTE taxed differently?

Base and commission are both ordinary income. Commission and bonuses may be withheld at a different rate when paid, so take-home pay can vary month to month.

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