How it's worked out
OTE is base plus variable pay at target. The base is guaranteed. The variable part is only paid as you sell, so OTE describes one outcome, hitting 100%, and your real pay can land above or below it.
The split between the two is the pay mix. A 60/40 mix on a $100,000 OTE means $60,000 base and $40,000 variable at target. The more of the OTE that's variable, the more your year depends on quota.
Worked example, with made-up figures: a job ad says $100,000 OTE, and the offer letter says $60,000 base with an annual quota of $800,000, paid at 5% commission. At 100% of quota you earn $40,000 in commission, so $100,000 in total. If you finish at 75%, you've sold $600,000, earned $30,000 of commission and take home $90,000 before tax. At 50% it's $80,000.
Two things change that sum. Some plans pay a higher rate above 100%, called an accelerator, and some pay nothing until you pass a floor, such as half of quota. Both are in the pay plan and never in the job ad, so ask for the plan before you compare two OTEs.
Where it shows up in your week
OTE is a yearly figure, and the variable half is earned deal by deal. The sales commission calculator works out what a deal pays you on a flat rate, tiers or a quota, with base pay, and how much you need to sell to earn what you want. The OTE calculator shows what a plan pays at 50% to 150% of quota, with an accelerator, a cap or a floor.
Related terms
Questions reps ask
No. Only the base is. The variable part depends on what you sell, so if you finish the year at 60% of quota, you earn well under the OTE.
It's the total pay at 100% of quota, base plus commission. Ask for the base and for how many reps on the team hit quota last year, because that tells you what the OTE usually turns into.
Base is the fixed part you're paid whatever you sell. OTE adds the commission or bonus you'd earn at target.
Yes, if you sell above quota and the plan has no cap. An accelerator above 100% makes each extra dollar of sales pay more.