On-Target Earnings Calculator

On-Target Earnings Calculator: User Guide

What is OTE (On-Target Earnings)?

On-Target Earnings (OTE) is the total annual compensation a salesperson can expect to earn if they meet 100% of their quota. It is the sum of:

• Base Salary – the guaranteed, fixed component of the rep’s pay
  
• Variable Compensation – the commission or incentive-based earnings tied to quota attainment
  
  

Formula: OTE = Base Salary + Target Variable Compensation

OTE is commonly used in job offers, compensation benchmarking, and plan design for sales teams. It’s also a key figure for reps evaluating job opportunities—because it reflects their realistic annual earning potential.

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Why On-Target Earnings Matter

OTE helps balance business goals and employee motivation. Here’s why it matters for different stakeholders:

• Sales Reps: Helps them evaluate if an offer is worth it based on effort vs reward
  
  
• Sales Managers: Acts as a guiding metric for building quota and territory plans
  
  
• Finance & Sales Ops: Keeps compensation costs predictable and linked to performance
  
  
• Recruiters: Allows them to position job offers competitively in the talent market
  
  

A well-set OTE creates alignment between the company’s revenue goals and the rep’s income aspirations.

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How the OTE Calculator Works

Our OTE Calculator helps you figure out expected earnings based on your pay structure and quota—whether you're a rep planning your future, or a leader designing comp plans.

Step 1: Enter Base Salary

Start with the fixed salary you pay (or earn) annually.

Step 2: Set Variable Compensation

You have two options here:

• Use Base:Variable Ratio – e.g., 60:40 means variable comp is 40% of total pay
  
  
• Or enter Variable Compensation directly in dollars
  
  

This gives you flexibility to calculate in the way that matches your comp plan.

Step 3: Enter Sales Quota

Choose whether your sales quota is set monthly, quarterly, or yearly. The calculator will annualize this quota to normalize comparisons across different pay structures.

This quota is used to compute:

• Base Rate = Target Variable / Annual Quota
  This tells you how much variable pay you earn per dollar of sales closed.
  
  

Step 4: Calculate

Click Calculate OTE to view:

• Total On-Target Earnings
  
  
• Base Rate (% earnings per dollar of quota)
  
  
• Visual pie chart of Base vs Variable split
  
  
• Full earnings breakdown to help validate and understand rep pay
  
  

You’ll also see a breakdown box that summarizes how your total compensation is split.

Tips for Setting the Right OTE

Whether you're designing a new plan or benchmarking an offer, here are some tips to set a smart, effective OTE:

1. Benchmark with Industry Standards

Make sure your OTE is competitive for the role and market. Example benchmarks:

• SDRs: $60K–$90K OTE
  
  
• AEs (SaaS): $120K–$200K
  
  
• Enterprise Sales: $200K+
  Resources like Glassdoor, RepVue, and peer-reviewed benchmarks are a great place to start.
  
  

2. Match Variable Pay to Quota Difficulty

The harder the quota, the more upside the rep expects. If your quota is steep, a higher portion of pay should be at risk (variable). Use accelerators to motivate beyond 100% attainment.

3. Keep Base-to-Variable Ratios Clean

Stick to common splits like:

• 60:40 – for SDRs or junior roles
  
  
• 50:50 – for mid-level AEs
  
  
• 40:60 – for senior or enterprise roles
  
  

Simple ratios help reps understand their plan and track earnings easily.

4. Make Overperformance Worthwhile

Even if you design for 100% attainment = OTE, you should allow reps to exceed their OTE. Consider uncapped commissions or accelerators to drive outperformance.

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Common Base:Variable Splits by Role

Sales Role

Typical OTE Split

SDR / BDR

60% Base / 40% Variable

Mid-Market AE

50% Base / 50% Variable

Enterprise AE

40% Base / 60% Variable

Sales Leader (VP)

70% Base / 30% Bonus

These ratios vary by industry and geography but serve as a strong starting point for plan design.

Who Should Use This Calculator?

Our OTE calculator is designed for:

✅ Sales reps evaluating job offers
✅ HR and recruiters setting compensation
✅ Finance teams modeling sales budgets
✅ Sales leaders designing comp plans

It's also ideal for startups trying to build scalable commission frameworks, or larger orgs experimenting with new comp models.

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