Guide

What is OTE?

OTE means on-target earnings. It is the total annual earnings you would make if you hit the performance target built into the plan.

Last reviewed 20 August 2026

OTE = base salary + target variable pay

If a role has a 70k base salary and 70k target commission, the OTE is 140k.

Treating OTE as guaranteed income.

It is a target-state number, not a promise.

Comparing OTE without comparing risk.

Two equal OTE jobs can have very different base/variable splits and real outcomes.

Questions to ask when someone quotes OTE

What percentage of the team hit target last year?

Is the plan capped, and how are over-target earnings treated?

What exactly counts toward target attainment?

Without those answers, OTE is useful as a headline number but weak as a real earnings forecast.

The split behind the number

Two offers, both “$120,000 OTE”, with very different risk profiles.

	80/20	50/50
Base salary	$96,000	$60,000
Target variable	$24,000	$60,000
Earnings at 0% quota	$96,000	$60,000
Earnings at 70% quota	$112,800	$102,000
At 130% with a 1.5× accelerator	$132,000	$150,000

$36,000 apart in a bad year; $18,000 apart the other way in a good one. Neither is better in the abstract — it depends how much control the role gives you over the outcome.

Typical splits: enterprise AE 50/50, mid-market AE 50/50 to 60/40, SDR or BDR 70/30 to 80/20, sales engineer 75/25, customer success with a renewal number 80/20 to 90/10, sales management 60/40 to 70/30.

Whether the OTE is realistic

What percentage of the team hit quota last year? Above 60% and the number is credible; below 40% and it is marketing.

Is there a threshold? Many plans pay nothing below 60–80% of quota.

Is the plan capped? A cap removes the upside that justified the lower base.

When does commission pay? On booking, invoice or cash collection — the last of these can delay a quarter by months.

Model it in the OTE calculator, or read the full comparison in OTE vs base vs commission.

OTE questions

FAQ

Can actual earnings exceed OTE?

Yes. In an uncapped or strongly accelerated plan, top performers can earn more than OTE.

Is a higher OTE always better?

No. A lower OTE with a stronger base and more realistic plan may be safer.

What does OTE mean?

On-target earnings: base salary plus variable pay assuming exactly 100% quota attainment. It is a projection of total annual cash compensation at target performance, not a guaranteed salary.

Is OTE the same as salary?

No. Only the base salary component is guaranteed. The variable half depends entirely on hitting quota and can be zero.

How do I calculate OTE?

Add base salary to target variable pay. If you know the OTE and the split, multiply the OTE by the base percentage for base salary and by the variable percentage for target commission.

Can I get a mortgage on OTE?

Lenders generally want two years of evidenced variable income before counting much of it, and many count only about half. Base salary is what underwriting relies on most heavily.

Reviewed 20 August 2026 by the BonusPayCalc editorial team. Gross planning estimates only — not payroll, tax, legal or HR advice. See methodology for how formulas are chosen, or report a correction.