OTE formula (simple)
OTE = base salary + on-target commission (variable at 100% quota).
Example: $70,000 base + $70,000 variable = $140,000 OTE with a 50/50 pay mix.
What OTE is — and is not
- Is: a recruiting and planning number for “full success” cash.
- Is not: a promise you will earn that amount every year.
- Depends on: quota difficulty, product market fit, ramp time, credit rules, clawbacks, and accelerators.
Pay mix: 50/50 vs 70/30 vs 40/60
Pay mix is how OTE is split between base and variable. A 50/50 mix means half is salary and half is at-risk. Base-heavy mixes feel safer; variable-heavy mixes pay more if you overperform (and hurt more if you miss).
When comparing two offers, model the same attainment on both — use our pay mix comparator.
How to evaluate a sales offer using OTE
- Write down base, OTE, and quota for the period.
- Ask what % of reps hit 100% last year (if they’ll share).
- Model 70%, 100%, and 120% attainment (linear first, then with accelerators).
- Confirm whether commission is on bookings, revenue, or margin.
- Read SPIFF, residual, and clawback rules before signing.
Related calculators
Full OTE tool in suite Accelerator calculator Compare two offers
FAQ
What does OTE mean in sales?
On-target earnings: base + variable you would earn at 100% of quota.
Is OTE guaranteed?
No. Base is typically fixed; variable depends on performance and plan rules.
Does OTE include equity or benefits?
Usually OTE means cash only. Equity, bonus programs, and benefits are separate.
Should I take the higher OTE or higher base?
It depends on quota realism and your risk tolerance. Model down-side attainment before deciding.