The pay number tied to quota
On-target earnings is what a rep earns at 100% of quota, combining base salary and target variable pay, and it defines the pay opportunity rather than a guaranteed amount. A rep with a 150,000 OTE on a 50-50 split earns 75,000 in base and, if they hit quota exactly, 75,000 in variable pay. Miss quota and the variable portion shrinks; beat it and earnings rise above OTE. OTE is therefore the on-plan reference point around which actual pay moves with quota attainment.The split signals how much is at risk
The base-to-variable ratio inside OTE tells you how the role is designed.
| Split (base:variable) | What it signals |
|---|---|
| 50:50 | Common for quota-carrying reps, balanced risk |
| 60:40 or higher base | Technical or strategic roles, more stability |
| Below 50 base | High-velocity or transactional, more upside at risk |
OTE anchors the comp plan
OTE is the anchor the rest of the plan is built around. Above quota, commission accelerators push earnings past OTE to reward overperformance. At the start of a role or territory, a draw against commission can smooth early income before quota is reachable. And OTE sits at the center of quota planning, because the pay opportunity has to be credible and competitive for the quota attached to it to motivate rather than discourage. Set OTE and its split deliberately, and the comp plan pulls reps toward the behavior the business wants.
Frequently Asked Questions
What is on-target earnings (OTE)?
OTE is the total compensation a sales rep earns at 100% of quota, combining base salary and target variable pay such as commission or bonus. A rep with a 150,000 OTE on a 50-50 split earns 75,000 base and 75,000 in variable pay if they hit quota exactly. OTE defines the pay opportunity, not a guarantee, since the variable portion depends on performance.
What is a typical base-to-variable split?
For quota-carrying sales roles, a 50-50 split of base to variable is a common reference, with more transactional or high-velocity roles sometimes weighting variable higher and technical or strategic roles weighting base higher. The split signals how much pay is at risk and how directly the role is expected to drive revenue.
Does hitting OTE mean hitting quota?
At a standard plan, yes: OTE is defined as earnings at 100% of quota. Reps who exceed quota earn above OTE, often accelerated, and reps below quota earn less. So OTE is the on-plan number, and actual earnings move above or below it with attainment.
Put these metrics to work
ORM builds custom revenue forecast models that turn concepts like on-target earnings (ote) into prescriptive action for your team.
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