What Is OTE (On-Target Earnings)?
On-Target Earnings (OTE) is the total annual compensation a sales professional receives when achieving 100% of their quota — calculated as base salary plus expected variable (commission) pay.
On-Target Earnings (OTE) is the total annual compensation a sales professional receives when achieving 100% of their quota — calculated as base salary plus expected variable (commission) pay. OTE is the standard way to communicate sales compensation and is the number candidates care about most when evaluating offers.
How OTE Is Calculated
OTE = Base Salary + Variable Pay (at 100% quota attainment)
For example, an SDR with a $55K base and $35K variable at target has an OTE of $90K. If they hit 120% of quota, their actual earnings exceed OTE. If they hit 70%, they earn less.
The base-to-variable ratio varies by role:
| Role | Typical Split | OTE Range |
|---|---|---|
| SDR | 60/40 to 70/30 | $70K–$95K |
| BDR | 65/35 to 70/30 | $65K–$90K |
| AE (Mid-Market) | 50/50 | $150K–$220K |
| AE (Enterprise) | 50/50 to 40/60 | $250K–$400K+ |
OTE vs. Actual Earnings
OTE assumes 100% quota attainment. In practice, only 55–65% of sales reps hit quota in a given year. This is why candidates scrutinize quota attainability, not just OTE. A $100K OTE with realistic quotas beats $120K OTE with quotas nobody hits.
How to Set Competitive OTE
Benchmark against your market, stage, and deal size. Overpaying relative to market inflates burn; underpaying increases your time-to-hire and limits your candidate pool. Shortlist can help you benchmark compensation as part of our AI-powered sales hiring — post your role free to get started.
Frequently Asked Questions
What does OTE stand for?
OTE stands for On-Target Earnings — the total compensation (base + variable) a sales rep earns when hitting 100% of their quota.
How is OTE different from base salary?
Base salary is the guaranteed fixed pay. OTE includes base salary PLUS commission/bonus earned at 100% quota attainment. OTE is always higher than base.
What is a typical SDR OTE?
SDR OTE typically ranges from $70K–$95K, with a 60/40 to 70/30 base-to-variable split. Top performers at well-funded startups can earn $100K+.
Do sales reps always hit OTE?
No. Only 55–65% of sales reps hit 100% quota in a given year. OTE represents target compensation, not guaranteed compensation.