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What is OTE in sales?
OTE in sales is an acronym that stands for On-Target Earnings. The OTE amount of a company or business involved in sales is the money it can expect to generate if it hits 100% of its quota sales targets. Normally, this number is provided as an annual figure.
This compensation is what a sales representative can expect if they meet their performance goals and targets. OTE includes a salesperson's base salary and any additional commissions they may earn. Forms of compensation like one-time bonuses, overtime pay, and other employee benefits are not included in OTE.
OTE assists salespeople in estimating their potential commissions for their role. In sales, OTE is the total amount of earnings a business or company can expect if it hits all of its desired sales targets.
OTE includes a sales representative's base salary and performance-based commissions. This means companies and businesses rarely promise specific OTE calculations. Although, OTE is usually a realistic figure that can be obtained by a group effort of sales professionals on the team.
The formula for calculating OTE for a sales employee is relatively simple:
Annual employee base salary + annual commissions earned at 100% of the quota = On-Target Earnings (OTE)
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