OTE meaning: what does OTE stand for in sales?

What is OTE?

OTE (On-Target Earnings) is the total amount a salesperson earns in a year if they hit exactly 100% of quota. It is base salary plus variable compensation at plan — not a maximum, and not a guarantee. An SDR with a $55K base and a $25K variable has an $80K OTE. Two things make OTE misleading if you read it carelessly. First is the split: a 50/50 split means half your pay depends on performance, while a 70/30 split is far safer. Second is attainment: an $120K OTE at a company where 30% of reps hit quota is worth less than a $95K OTE where 70% do. Always ask what percentage of the team hit quota last year, whether there is a cap, whether commission accelerates above 100%, and how long the ramp guarantee lasts.

When to use OTE

• Evaluating a job offer against another offer
• Modelling personal income before accepting a quota change
• Comparing SDR, AE and CSM compensation across segments

Real examples

• SDR: $55K base + $25K variable = $80K OTE, 70/30 split.
• Mid-market AE: $120K base + $120K variable = $240K OTE, 50/50 split, 1.5x accelerator above 100%.
• At 80% attainment on a 50/50 $240K OTE, actual earnings are roughly $216K — not $192K, because base is fixed.

Common mistakes

• Comparing OTE figures without comparing the base/variable split.
• Ignoring team-wide attainment. A high OTE with 25% attainment is marketing, not pay.
• Missing a commission cap, which quietly removes the upside from a great year.
• Forgetting clawbacks on churned or unpaid deals.

Want to practice OTE live? Run a roleplay with an AI buyer.