On-Target Earnings (OTE)

On-Target Earnings is the number on the offer letter that assumes the rep hits exactly 100% of quota — not less, not more. It is base salary plus the variable commission earned at full attainment, and it is the headline figure recruiters quote, candidates negotiate, and finance models. OTE is not a guarantee; it is a target. The brutal arithmetic of B2B sales is that the median rep finishes the year somewhere between 50% and 80% of quota, which means most reps earn somewhere between base and OTE — closer to base than to the top.

How OTE Is Structured

Standard enterprise SaaS uses a 50/50 split: half base, half variable. A $260k OTE means $130k base and $130k commission at 100% attainment. SDR roles skew 70/30 (more base, less variable). Senior enterprise AEs sometimes run 40/60 or 30/70, where variable dominates and the upside above quota is uncapped. The split tells you who the company thinks is doing the selling — high-base means the product or marketing is closing, high-variable means the rep is.

OTE Pay Mix By Role

Worked OTE Example

An enterprise AE with a $260k OTE on a 50/50 split has a $1.3M annual quota at a 10% commission rate ($130k variable ÷ 0.10 = $1.3M). She closes $975k for the year — 75% attainment. Her variable that year is roughly $97.5k (75% × $130k, before any decelerators), and her actual W-2 lands at $227.5k. She did not earn OTE. She earned 87.5% of OTE on 75% attainment — which is the deal almost every rep actually gets. The phrase "I made my OTE last year" is rarer than LinkedIn suggests.

When Sales Orgs Use OTE

Recruiters lead with OTE because it is the largest legible number. Finance models OTE × headcount × expected attainment to budget commission expense. Hiring managers use OTE to position bands against competitors — a $250k OTE in a market where peer companies pay $300k loses candidates. RevOps uses OTE-to-quota ratio to sanity-check plan design: industry standard is 4x to 6x (a $250k OTE rep should carry $1M–$1.5M quota). Ratios under 4x mean the company is overpaying or under-quota'ing; ratios over 6x mean reps will quit. See Quota Attainment for the input that determines actual earnings.

Common OTE Misconceptions And Gaming Patterns

The biggest misconception is that OTE is what reps earn. It isn't — it's what they earn at exactly 100%, and the average rep finishes well under that. The second misconception is that two $250k OTEs are equivalent: a 70/30 split with a $175k base is wildly different risk than a 30/70 split with a $75k base, even though the headline matches. Companies game OTE by quoting it with accelerators baked in ("OTE is $300k but top reps make $500k+") which technically describes one rep. Reps game it the opposite direction during negotiation by claiming last year's W-2 as their "OTE," which conflates earnings with target. The honest answer to "what's your OTE?" is two numbers: the target and the median actual W-2 of the team. Companies that won't share the second number are telling you something. See Replacement Level Rep for the benchmark that determines whether a given OTE is justified.