You're interviewing for a sales role. The recruiter says "This position has an OTE of $150,000." Sounds great, right?
But what does that actually mean? Is that guaranteed? How much of it is base salary? What happens if you miss quota?
OTE is one of the most misunderstood terms in sales compensation. Let's break it down.
What Does OTE Stand For?
OTE = On-Target Earnings
It's the total compensation you'll earn if you hit 100% of your quota. It includes both your base salary and your variable (commission) pay.
Base vs. Variable Split
OTE is made up of two components:
Base Salary: The fixed amount you're paid regardless of performance. This is guaranteed.
Variable Pay: The commission or bonus you earn based on hitting your targets. This is NOT guaranteed.
The "split" describes how OTE is divided between base and variable:
| Split | Base | Variable | Common For |
|---|---|---|---|
| 50/50 | $75K | $75K | AEs, Closers |
| 60/40 | $90K | $60K | Mid-market AEs |
| 70/30 | $105K | $45K | SDRs, Enterprise |
| 80/20 | $120K | $30K | CSMs, AM roles |
*Examples based on $150K OTE
💡 Rule of thumb
The more you control the sales outcome, the higher your variable percentage. Closers typically have 50/50 splits because they directly drive revenue. SDRs often have 70/30 because they're further from the close.
The Reality of "On-Target"
Here's what recruiters won't always tell you: most reps don't hit 100% of quota.
Industry data suggests average quota attainment is somewhere between 50-70%. That means the "average" rep earns less than OTE.
Before accepting an offer, ask:
- What percentage of the team hit quota last year?
- What's the average attainment across the team?
- What did the top performer earn? The bottom?
If only 20% of reps hit quota, that $150K OTE might realistically be $110-120K.
How to Calculate Your Realistic Earnings
Let's say you're evaluating a role with:
- $150K OTE
- 50/50 split ($75K base / $75K variable)
- Team average attainment: 80%
That's $15K less than the headline number. Still good, but important to know.
OTE Red Flags
🚩 Unrealistic quotas
If the quota seems impossibly high, that shiny OTE number is meaningless. Ask about historical attainment rates.
🚩 Capped commissions
Some companies cap how much you can earn, even if you crush your number. This limits your upside.
🚩 Vague variable structure
If they can't clearly explain how commission is calculated, that's a problem. Get it in writing.
🚩 No accelerators
Good comp plans pay higher rates when you exceed quota. If there's no upside for overperformance, your earning potential is limited.
Questions to Ask About OTE
When evaluating an offer:
- What's the base/variable split? Know your guaranteed income.
- What's the quota? Is it achievable based on historical data?
- What's average team attainment? This tells you realistic earnings.
- Are there accelerators? What do you earn at 120%, 150%?
- Are there decelerators or caps? What's the maximum you can earn?
- How often is quota adjusted? Some companies raise quota constantly.
- What's the payment schedule? Monthly? Quarterly? On deal close?
OTE vs. Total Compensation
OTE doesn't include everything. Your total compensation might also include:
- Equity/Stock options - Common at startups
- SPIFs - One-time bonuses for specific goals
- Benefits - Healthcare, 401K match, etc.
- Perks - Car allowance, phone stipend, etc.
When comparing offers, look at total compensation, not just OTE.
Track your actual earnings
Stop guessing what you'll make. Comish calculates your commission in real time based on your actual deals.
Try Comish Free →Bottom Line
OTE is a useful benchmark, but it's not a promise. To understand what you'll actually earn:
- Know the base/variable split
- Understand the quota and historical attainment
- Ask about accelerators and caps
- Calculate realistic earnings, not just OTE
The best sales jobs have achievable quotas, aggressive accelerators, and transparent comp plans. Don't be dazzled by a big OTE number without understanding what it takes to earn it.