OTE
What is OTE?
OTE (On-Target Earnings) is the total annual compensation a rep is expected to earn at 100% quota attainment: base salary plus the variable commission paid at full quota. If a rep has an $80,000 base and earns $80,000 in commission at quota, their OTE is $160,000. It is the standard figure used in job postings, offer letters, and pay-equity analysis.
The word that matters is "target." OTE is what an average, fully ramped rep earns at plan, not the floor (base salary alone) and not the ceiling (top performers on an uncapped plan earn well beyond it). Finance teams budget commission expense against expected attainment, often 85% to 95% of quota, not a clean 100%, because assuming every rep lands exactly at plan overstates the budget.
A simple example to understand it:
Meet Rachel, an Account Executive. Her plan looks like this:
Base salary: $80,000
Variable at 100% quota: $80,000
Pay mix (base / variable): 50 / 50
Annual quota (new ARR): $800,000
Commission rate (variable ÷ quota): 10%
OTE (base + variable): $160,000
At exactly 100% quota, Rachel earns her full $80,000 variable on top of her $80,000 base and lands on her $160,000 OTE.
What this means?
Only the base is guaranteed. If Rachel closes 80% of quota, she earns roughly $80,000 base plus $64,000 variable, about $144,000, below OTE. If she closes 120% on an uncapped plan with accelerators, she clears well above $160,000. Same OTE on paper, three very different paychecks. That is why an OTE figure quoted without its pay mix and quota tells a rep almost nothing about their real risk.
Why OTE matters to RevOps and Finance leaders
OTE is more than a recruiting number. It is the input that drives sales hiring budgets, cost-of-sales modeling, quota capacity planning, and commission expense forecasting under ASC 606. When RevOps benchmarks OTE against quota (the OTE-to-quota ratio, typically 4x to 6x for SaaS AEs), Finance can predict commission expense as a percentage of bookings and catch plans that are economically unsustainable before they get approved.
OTE also anchors how reps read their offer letter. A poorly explained OTE figure, especially one quoted without a pay mix or quota, is the most common source of comp disputes in a rep's first 90 days. Defining OTE precisely, and showing reps the math, is one of the highest-leverage transparency wins a comp team has.
OTE vs base salary vs total compensation
These three figures get used interchangeably in offer letters and on Glassdoor, and they should not be. The distinctions matter:
OTE benchmarks by sales role (US, B2B SaaS, 2026)
These ranges reflect 2025 to 2026 RepVue and Pavilion benchmarks for US-based B2B SaaS roles. Actual figures vary by company stage, region, and product complexity:
Ranges are directional and reflect on-target pay, not top-performer earnings.
Common mistakes with OTE
1. Reading OTE as guaranteed salary:
OTE is what a rep earns at 100% quota, and many reps never hit exactly 100%, especially in year one. Only the base salary portion is guaranteed. Treating the full OTE as expected income is the fastest route to a disappointed rep and an early attrition risk.
2. Comparing two OTE numbers without checking pay mix:
A $200,000 OTE at a 50/50 mix ($100,000 base) carries far more risk than a $180,000 OTE at 70/30 ($126,000 base). The higher headline number is not automatically the better offer. Pay mix, not OTE alone, tells you how much income is actually at risk.
3. Quoting OTE without a quota or a ramp:
An OTE figure means little without the quota it is tied to and the ramp schedule that governs the first few quarters. A high OTE attached to an unrealistic quota is not a high-earning role. Always pair OTE with its quota and its ramp.
How Visdum handles OTE
Visdum calculates projected OTE for every rep from their base, quota, commission rate, and plan structure, then shows earnings at any attainment level, not just a clean 100%. Sales leaders can model different OTE and pay-mix scenarios while designing a plan, staying market-competitive without blowing the commission budget, and reps see their own OTE math in real time instead of guessing from an offer letter. Finance sees projected versus actual commission expense in one view, so OTE stops being a number nobody can reconcile.
Take a self-guided product tour → to see OTE modeling and live earnings in action, or read how to calculate sales commissions for SaaS.
Related terms
Base Salary · Pay Mix · Variable Compensation · Quota Attainment · Accelerator · Uncapped Commission · Ramp Period
Calculate your OTE in 30 seconds
Frequently Asked Questions
Is my OTE the same as my salary?
No. OTE is your total pay at 100% quota, base plus variable. Only the base is guaranteed. On a $160,000 OTE with a 50/50 mix, $80,000 is guaranteed base and the other $80,000 depends on hitting quota.
Is OTE guaranteed?
No. OTE is a target, not a floor. Reps who miss quota earn less than OTE, and reps who beat it on an uncapped plan often earn more. Finance budgets against expected attainment, commonly 85% to 95%, not a guaranteed 100%.
What is a good OTE-to-quota ratio?
Most B2B SaaS AE plans run an OTE-to-quota ratio of 4x to 6x, meaning a rep carries four to six times their OTE in quota. Below 4x the plan gets expensive relative to bookings; well above 6x quota can feel unreachable.
Is OTE prorated during ramp?
OTE is annualized, but variable pay during ramp is usually based on a reduced quota or a draw. Many companies use a ramped quota (for example 25% / 50% / 75% / 100% across the first four quarters) and may add a non-recoverable draw to bridge early-months income.
Does OTE include benefits or equity?
No. OTE is base salary plus variable cash commission only. It excludes health insurance, retirement contributions, equity, signing bonuses, and one-time incentives like SPIFFs. Those sit inside total compensation.
Can a rep earn more than their OTE?
Yes. OTE is the expected figure at 100% quota, not a cap. On an uncapped plan, reps who exceed quota keep earning, often at a higher rate through accelerators that kick in past 100% attainment.