What OTE actually means
OTE (on-target earnings) is what you earn in a year if you hit exactly 100% of quota: your base salary plus your target variable (commission or bonus). A $120,000 OTE on a 50/50 split is $60,000 base plus $60,000 that you only get by hitting your number.
The split tells you how much of your pay is guaranteed. Closing roles like account executives are often around 50/50. SDR/BDR, account management and customer success roles usually have more base, like 60/40 or 70/30. Splits vary by company, so always ask.
How the estimate works
Base is divided by your number of paychecks (26 if paid every two weeks). Commission is divided by how often it's paid out.
Worked example
$120,000 OTE, 50/50, base paid every two weeks, commission monthly, 1.5× accelerator above quota:
- Base: $60,000 a year, or about $2,308 per paycheck before tax
- At 100% of quota: $60,000 variable, about $5,000 a month in commission
- At 120%: $60,000 + ($60,000 × 20% × 1.5) = $78,000 variable, $138,000 total
- At 80%: $48,000 variable, $108,000 total
Questions to ask before you accept an OTE offer
- What % of reps hit quota last year? If most of the team lands at 70%, a realistic expectation is closer to 70% of the variable.
- Is there a ramp? New reps often get a reduced quota or a guaranteed commission for the first months.
- Is there a draw, and is it recoverable? A recoverable draw is an advance you pay back from future commission. A non-recoverable draw you keep.
- Accelerators and caps: Is there a cap? What's the rate above quota? Uncapped plans with real accelerators are where top reps make their money.
- When is commission paid? On booking, on go-live, or when the customer pays? With what delay?
Why the paycheck is smaller than the math
Withholding: federal income tax, Social Security and Medicare (7.65% combined), state tax, plus benefits and 401(k) deductions. Commission is often withheld at a flat federal rate as supplemental wages. The withholding boxes here are rough placeholders. Change them to match your own pay stubs for a closer estimate.
FAQ
What does OTE mean in sales?
OTE stands for on-target earnings: base salary plus target variable pay at 100% of quota. It's a target, not a guarantee. Only the base is guaranteed.
What is a typical base/variable split?
Closing roles like account executives are often around 50/50. Roles with more guaranteed pay, like SDRs, account managers and customer success, are commonly 60/40 or 70/30. It varies by company and industry.
How do accelerators change my pay?
Above 100% of quota an accelerator multiplies your commission rate. With a 1.5× accelerator, every dollar of variable you'd earn above quota is worth 1.5×. At 120% attainment on $60k variable, that's $60k + $18k = $78k.
How much of my commission check will I take home?
It depends on your tax situation. In the US, commission is often withheld at a flat 22% federal rate as supplemental wages, plus 7.65% for Social Security and Medicare, plus state tax. Use your own pay stubs to set the withholding % in the calculator.