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This question is about employer.
What is OTE pay?
OTE pay is on-target earning and it means the amount of money you can expect to earn if you hit your entire quota. This number is usually given in an annual figure. It is calculated by adding the Annual base salary plus Annual Commission earned at 100% of quota = OTE.
For example, someone has an OTE of $100,000. Their base salary is $52,000 per year. They have a monthly quota of $40,000 and earn a 10% commission off every deal they sell.
Therefore, if they close 100% of their quota every month, they would earn $4,000 every month. This means $48,000 in commission every year. Add that $48,000 to the $52,000 base salary, and you get the $100,000 on-target earnings.
Types of OTE breakdowns:
Sales OTE = base salary + projected commissions from sales.
Executive OTE = base salary + likely bonus.
Overall, OTE can be a fixed, lump payment, a specific commission percentage, or a combination of both. A good general guideline is to base OTE on one-fifth of the annual sales quota or six to eight times the sales quota, but you can vary these guidelines based on the competitiveness of your industry, the experience of your salespeople, the complexity of your sales process, and your company's revenue.
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