On-target earnings: base salary plus the variable component earned at exactly 100% of quota. It is a design figure, not a prediction.

What is a typical base-to-variable split?

Closing roles commonly sit near 50/50, with more base for roles further from the close. The split should follow how much of the outcome the person controls, not convention.

What does OTE not tell you?

What anyone actually earns. If most of the team lands below target, real earnings sit well under OTE, and the number becomes a recruiting claim rather than a description.

What is the quota-to-OTE ratio?

Quota divided by OTE — how much revenue a rep must produce to earn their target package. It follows from gross margin and cycle length rather than being a target itself.

On-Target Earnings (OTE)

Total expected compensation when a seller hits quota exactly: base salary plus target variable.

What it states and what it does not

OTE is what the plan pays at exactly 100% attainment. It says what the design intends. It says nothing about what the team earns, which depends entirely on the attainment distribution underneath it.

Check OTE against actual earnings before quoting it

If the median rep lands at 70% of quota, median earnings are far below OTE and the figure is a recruiting number rather than a description. That gap is also the fastest route to attrition among people who joined believing it.

Setting the split

Base the ratio on control. The more of the outcome a person genuinely controls, the more variable is defensible; roles with long lead times and shared credit need more base.
Derive quota-to-OTE from gross margin and cycle length rather than adopting a published multiple.
Model the plan against last year's actual deals before shipping it. Surprises are design errors, not edge cases.
Publish the derivation. Goal-setting research conditions the performance effect on commitment, and an unexplained number is harder to commit to.

What to report instead

The attainment distribution, not the average — a wide spread usually indicates territory or quota design before talent.
Actual earnings against OTE, by tenure cohort, so ramping reps are not averaged with fully ramped ones.
The share of the team between 80% and 120% of target, which is the clearest single read on whether the plan is set correctly.

RELATED TERMS

Quota Attainment

The proportion of quota a rep achieved, and across a team, the distribution of that proportion.

Quota-to-OTE Ratio

Quota divided by on-target earnings — how much revenue a seller must produce per unit of their own cost.

Quota

The revenue target assigned to an individual rep for a period. The most consequential number in a seller's working life, and the mechanism translating a company target into individual accountability.

Compensation Plan

The document defining how a seller earns variable pay: what is measured, at what rates, with what accelerators, caps and clawbacks.

COMMON QUESTIONS

What is OTE?: On-target earnings: base salary plus the variable component earned at exactly 100% of quota. It is a design figure, not a prediction.
What is a typical base-to-variable split?: Closing roles commonly sit near 50/50, with more base for roles further from the close. The split should follow how much of the outcome the person controls, not convention.
What does OTE not tell you?: What anyone actually earns. If most of the team lands below target, real earnings sit well under OTE, and the number becomes a recruiting claim rather than a description.
What is the quota-to-OTE ratio?: Quota divided by OTE — how much revenue a rep must produce to earn their target package. It follows from gross margin and cycle length rather than being a target itself.