OTE (On-Target Earnings)
On-Target Earnings (OTE) is the total annual compensation a salesperson earns when they hit exactly 100% of their quota — the fixed base salary plus the variable commission paid at full attainment. It is the headline number quoted in a sales job offer, and it represents expected pay at target, not guaranteed pay and not a cap. A rep who beats quota earns above OTE; a rep who misses it earns below.
OTE = Base Salary + On-Target Variable (Commission)
A role advertised at "$160k OTE, 50/50 split" means $80,000 in guaranteed base salary and $80,000 in commission earned if the rep hits 100% of quota. Miss quota and total earnings fall below $160k; exceed it and accelerators can push earnings well past it.
The Base-to-Variable Split
OTE is described as a ratio of base to variable pay, and the split signals how much of the role is "closing" versus "supporting."
- 50/50 — the standard for a quota-carrying Account Executive who owns the close. Half the pay is at risk against quota.
- 60/40 or 70/30 — more base-weighted, common for SDRs, longer enterprise cycles, or roles with less direct control over the close.
- 75/25 or 80/20 — heavily base-weighted, used for sales engineers, customer success, and other roles that influence but don't own revenue.
The more directly a role controls whether a deal closes, the more variable (at-risk) the pay. A pure closer sits near 50/50; a supporting role sits closer to 80/20.
OTE Benchmarks for B2B SaaS
Typical 2026 OTE ranges for US B2B SaaS sales roles:
| Role | Typical OTE | Common Split |
|---|---|---|
| SDR / BDR | $60k–$90k | 60/40–70/30 |
| Account Executive (SMB) | $120k–$180k | 50/50 |
| Account Executive (Mid-Market) | $180k–$260k | 50/50 |
| Account Executive (Enterprise) | $260k–$320k+ | 50/50 |
These scale with deal size and cycle complexity — an enterprise AE carries a larger quota and a longer cycle, so the OTE is higher to match the difficulty and the revenue at stake.
Why OTE Matters to a Founder
For a founder hiring their first salesperson, OTE is the number that tells you whether the hire is economically sound before you make it. The test is simple: a rep's quota should be a multiple of their OTE — commonly 3× to 5× — so the revenue they're expected to produce comfortably covers their fully-loaded cost. A $160k OTE rep carrying a $500k quota is a 3.1× ratio, which is the lower bound of healthy. If you can't set a quota at least 3× OTE that the rep can realistically hit, the role doesn't pay for itself yet — which usually means the motion isn't ready to hand off.
That readiness question is the heart of founder-led sales: you hire a rep only once the motion is repeatable enough that a quota of 3–5× OTE is achievable. Before you set the commission, it's worth confirming the unit economics support it — a rep's cost flows straight into your CAC, and the deals they close are governed by your win rate and average ACV.
Related terms
OTE sits alongside the metrics that determine whether a sales hire is affordable: average contract value (ACV) sets the deal size behind the quota, win rate determines how many opportunities convert to hit it, and blended CAC absorbs the rep's cost. Together they decide whether OTE is an investment or a liability.
Related Calculators
- CAC Optimizer — A sales hire's fully-loaded cost flows into CAC. Model whether the rep's expected output keeps acquisition economics healthy.
- Pipeline Velocity Scan — Quota attainment depends on velocity. Check whether your pipeline can produce the revenue a 3–5× OTE quota requires.