On-Target Earnings (OTE)

The total pay a sales or commission-based employee earns when hitting 100% of their quota.

On-Target Earnings (OTE) represents the total expected annual compensation when an employee hits exactly 100% of their performance targets. It is the sum of base salary plus the variable component at full quota attainment. OTE is the number most commonly cited in sales job postings and offer letters, and one of the most consistently misunderstood compensation figures in the market.

OTE is most common in sales roles, but also appears in account management, recruiting, and customer success. A posting that says '$120K OTE' typically means $60K base + $60K in commissions at 100% quota. The base-to-variable split varies by role: 50/50 is common in enterprise sales, 70/30 or 80/20 is more typical in SMB or SDR roles.

The word 'target' is doing significant work in OTE — it's not a guaranteed number. Your actual earnings depend on your individual performance, territory quality, market maturity, quota-setting methodology, and factors outside your control like product issues or economic conditions.

Quota structures vary significantly and deserve careful scrutiny. How is quota set — historically achievable or aspirationally aggressive? Does it ramp during your first months? How do accelerators work above quota? What percentage of your commission is a recoverable draw? These details determine whether a stated OTE represents realistic earnings or optimistic marketing.

Questions to Ask About OTE Before Accepting

  • What percentage of the sales team hit 100% of quota last year? (Below 50% is a significant red flag.)
  • What was the median attainment — not just the average, which can be skewed by top performers?
  • Is quota ramped for new hires? For how long, and at what percentage of full quota?
  • Is the variable component capped at a maximum, or truly uncapped above 100%?
  • How are accelerators structured — at what attainment do they kick in?
  • What is the draw policy — is the base truly a floor, or is there a recoverable draw?

Evaluating Whether OTE Is Achievable

A $200K OTE at a company where 30% of reps hit quota is a very different offer than $180K OTE where 70% hit. Always ask to speak with a current or recent rep in a comparable role. Ask what the realistic range is for someone in their first year versus a tenured rep with a mature territory. If a company is reluctant to share quota attainment data, that tells you something important. Sustainable OTE should also account for territory maturity — a rep inheriting a fully developed territory starts from a different place than one building from scratch.

OTE at Startups vs. Established Companies

OTE at an early-stage startup and at an established company with a mature sales motion represent fundamentally different risk/reward profiles. At a startup, you may be selling a product still finding product-market fit, into a market that's not yet educated, with limited brand recognition — all of which makes hitting quota harder. At an established company, the playbook is proven, the product has references, and territory may have inbound pipeline. When evaluating an OTE offer, assess the stage of the company and how that affects the realism of the number.

Understanding Commission Accelerators

Accelerators are multipliers that increase your commission rate once you exceed quota. A common structure: earn 10% of deal value up to 100% quota, then 12% from 100-120%, then 15% above 120%. If a company advertises 'uncapped earnings,' ask what percentile achieves that and what accelerator structure makes it possible. Also clarify whether accelerators reset quarterly or annually — quarterly reset plans make it harder for a strong Q3 to compensate for a slow Q1.

Example

A sales rep has a $70K base and $70K variable at 100% quota — $140K OTE. They hit 120% with a 1.5x accelerator above 100%: $70K + $70K + ($70K × 0.2 × 1.5) = $161K.