OTE Calculator (On-Target Earnings)
Estimate your yearly earnings from base salary, target commission, quota attainment, and accelerators.
Tip: This model assumes linear commission up to the accelerator threshold and accelerated payout above it.
What is OTE?
OTE stands for On-Target Earnings. It is the total compensation you can expect to earn in a year if you hit your sales target (usually 100% quota attainment). Most commonly, OTE is made up of:
- Base salary (fixed pay), and
- Variable pay (commission or performance bonus).
For sales roles, OTE is one of the most important numbers to understand before accepting an offer. Two jobs may both list the same OTE, but the payout risk, quota realism, and commission rules can make one dramatically better than the other.
Simple OTE Formula
At 100% attainment
OTE = Base Salary + Target Variable + Other Bonus
Example: If your base is $80,000, target commission is $40,000, and guaranteed bonus is $5,000, your OTE is $125,000.
At other attainment levels
Your realized earnings may be lower or higher than OTE depending on performance. If you are below target, your variable is usually reduced proportionally. If you exceed target, accelerator rates may increase your commission payout.
How this OTE calculator works
This calculator estimates annual earnings using a practical commission model:
- Commission grows linearly from 0% to your accelerator threshold.
- Above the threshold, extra attainment is multiplied by your accelerator rate (like 1.5x).
- Total earnings = base + estimated commission + other guaranteed bonus.
This gives you a fast way to compare scenarios: “What if I finish at 85%?”, “What if I hit 130% with accelerators?”, or “How much does a higher base matter?”
Example scenario
Let’s say your comp plan includes:
- Base salary: $80,000
- Target variable: $40,000
- Accelerator threshold: 100%
- Accelerator: 1.5x
If you finish at 120% attainment, the first 100% of performance pays at the normal rate, while the extra 20% pays at 1.5x. That can push your total earnings meaningfully above your listed OTE.
How to evaluate a sales compensation offer
1) Check pay mix
Is the split 50/50, 60/40, or 70/30? Higher variable can mean higher upside, but also higher risk.
2) Ask about quota attainability
“What percentage of reps hit quota last year?” is one of the best questions you can ask. A high OTE is less useful if only a small fraction of the team reaches it.
3) Understand accelerators and caps
Accelerators reward overperformance. But some plans also include payout caps, which limit upside. Make sure you know both.
4) Review ramp period details
New hires often receive adjusted quotas or guaranteed ramp pay. That can heavily affect first-year earnings.
Common OTE mistakes to avoid
- Assuming OTE is guaranteed income.
- Comparing offers by OTE alone instead of plan quality.
- Ignoring quota resets, territory quality, and deal cycle length.
- Skipping contract details around clawbacks and payout timing.
Frequently asked questions
Is OTE the same as salary?
No. Salary is fixed. OTE includes salary plus variable compensation tied to performance.
Can I earn above OTE?
Yes. If your plan has accelerators and no restrictive cap, top performers can earn significantly above OTE.
What is a good OTE?
“Good” depends on role, market, quota realism, and risk tolerance. A lower OTE with a more attainable plan can outperform a higher OTE on paper.
Final thought
OTE is useful, but only if you understand the mechanics behind it. Use this calculator to test multiple attainment levels and make better compensation decisions with confidence.