How OTE Works:
Few things confuse job seekers more than OTE.
Few things frustrate salespeople more than unrealistic OTE.
And few things create more drama between sales leaders and reps than—yes—OTE.
If you’ve been around the sales world long enough, you’ve probably had one (or all) of the following experiences:
We’ve all been there.
This guide will help you finally understand OTE in a way that makes sense. By the end, you’ll be able to evaluate any compensation plan with clarity, confidence, and just enough healthy skepticism.
Let’s begin.
OTE = Base Salary + Commission + Bonuses (when hitting quota)
That’s it. Nothing mystical. Nothing sneaky.
It’s the expected annual earnings of a rep who achieves 100% of quota.
What OTE is not:
Companies use OTE because it communicates total earning potential and allows candidates to compare roles.
But here’s the nuance most people miss:
Two roles with the same OTE can be wildly different depending on quota, ramp, territory, and historical attainment.
And that is why OTE requires deeper analysis.
Every compensation plan is built from three core components:
Your guaranteed income.
You could close zero deals (please don’t) and still earn this.
Base varies depending on:
For example:
The variable pay tied to performance.
Commission plans vary massively. Common structures include:
Some companies add bonuses for:
These can add 5–20% on top of commissions.
Quota is the key driver of your OTE reality.
Imagine two roles:
Role A
Role B
Here’s how to interpret quota correctly:
If even one of these is misaligned, OTE quickly becomes fantasy.
The ramp period is the time a new rep is expected to learn the job before being held to a full quota.
Typical ramps last:
Two things matter:
Good comp plans adjust your quota proportionally during ramp.
Bad comp plans pretend you should be closing deals by Week 3.
OTE is only meaningful if you know rep attainment rates.
Here’s the magic question to ask in interviews:
“What percentage of reps hit quota last year?”
The answer tells you almost everything you need to know.
Very healthy organization.
This is normal in many industries.
Be cautious. Something is misaligned.
That “$300k OTE” is basically marketing copy.
Other questions that reveal reality:
OTE without context is just a number.
Half base, half variable.
Typical for SaaS AEs and mid-market roles.
More base, less risk.
Common in industries with long sales cycles.
You see this often in:
Riskier. But can be extremely lucrative.
You trade stability for upside.
Accelerators reward exceeding quota — and this is where top performers earn life-changing money.
Example:
Accelerators motivate reps to blow past quota rather than stop at 100%.
Companies that offer generous accelerators want top performers to earn big.
There are certain signs a comp plan is designed to look attractive but not pay well.
If an SDR role claims $180k OTE, something is strange.
If the path to OTE looks like a geometry problem, move on.
Always a massive red flag.
A company should want reps to close more revenue.
Once per year = normal
Once per quarter = suspicious
Once per month = chaos
Your potential earnings rely heavily on territory quality.
Means the variable structure might be inflated to get you in the door.
This often indicates fundamental go-to-market problems.
Here’s a simple way to sanity-check any OTE claim:
Example:
OTE: $200,000
Team attainment rate: 60%
Your fit for the industry: 80%
Realistic earnings = $200,000 × 0.6 × 0.8 = $96,000
Candidates who calculate this tend to choose roles with fewer surprises.
For 1099 reps, OTE is usually not listed — and shouldn’t be.
Instead, look at:
1099 roles can produce enormous income, but only when the rep already knows how to sell in that vertical.
Most candidates evaluate sales roles based only on the headline OTE.
Top performers evaluate roles based on:
Once you understand OTE deeply, you stop getting surprised by comp plans — and you start choosing roles where you know you can win.
OTE is neither good nor bad.
It’s simply a model — a projection — a structured way of communicating upside.
But whether that upside is real depends on the details.
If you take nothing else from this guide, take this:
OTE tells you what’s possible.
Quota, territory, attainment, and market conditions tell you what’s probable.
Know the difference, and you will make far better decisions about your sales career.