What Does OTE Mean? Fundamentals Every Sale Individual Should Know

What Does OTE Mean? Fundamentals Every Sale Individual Should Know
Image by StartupStockPhotos from Pixabay

OTE abbreviated as On Target Earnings is the amount of money you can expect if your performance matches the expected targets in a sales firm. However, the actual pay might be higher or lower. For instance, a sales job posting might say $40,000 OTE. However, sometimes the number is rounded to an even earning for convenience For instance, your true OTE might be $40, 240 but you might be told $40,000 for simplicity.

What Does OTE Mean for Salary?

On Target earnings in salary means the total amount you receive. Hence, this totals your respective salary and the amount you earned through completing your targets.

Nevertheless, many sales individuals get confused about “what is OTE and what does OTE mean in sales?.” So, OTE in sales or other streams holds the same significance.

Also Read – SPIFF in Sales: Path to Boost Retention and Morale

How do you calculate OTE?

Although the term OTE sounds complex, it is very easy to calculate. Hence, the equation for OTE is 

Annual Base Salary+Annual Commission earned at 100% of quota=On-Target Earnings

For example, if a sales executive salary is $34,000 and their on-target commission is $16,000, then their OTE will be $50,000. Meanwhile, many United Kingdom companies provide a minimum commission of fifteen per cent while 85 per cent is their base salary. 

What Does OTE Mean? Fundamentals Every Sale Individual Should Know
Image by RAEng_Publications

Capped Vs Uncapped OTE 

You must have come across the terms, Capped and Uncapped OTE while reviewing your offer letter. However, OTE salaries can differ depending on the type.

Capped OTE

In Capped, there is a certain fixed limit on the amount of commission an employee can earn. Additionally, practising this method can assist a company in monitoring its budget.

Uncapped OTE

In uncapped OTE, there is no certain fixed limit on the amount of commission an employee can earn. Meanwhile, in this, employees can go beyond their subjected OTE. This influences sales individuals to achieve more sales and OTE compensation.

Examples of OTE

Field Sales Representative

For the primary-level sales job, you might get paid around $18,000 as your basic salary. However, if you hold the capability of completing the target, you can earn more, up to $38,000. Not only this, but some sales jobs have no limit on how much you can earn.

Sales Manager

The employees working as sales manager gets paid more than field sales representatives. Meanwhile, they are paid between €45,000 and €70,000 or maybe more. In addition to it, they can receive €30,000 as a commission. However, how much OTE you can receive directly depends on your job, your work nature, and your company.

Sales Director

Lastly, the Sales Director ranks higher in the hierarchy of the sales department. Hence, this also leads to earning a higher base salary. For example, they can earn anywhere from €90,000 to €160,000 as their base salary in their position. In addition to it, they can receive up to €40,000 commission, if they have a higher salary.

Also Read – How to Leave a Life360 Circle: A Step by Step Guide

What is the average OTE for a Sales Rep Role?

Most of the sales company gives OTE to their employees. However, its amount depends on the region, the company’s size, and its nature. An average sales rep in the US receives $30,000 per year ranging from $30,000 to $1,00,000, according to Glassdoor.

Nevertheless, this number increases with enterprise reps, who deal with larger and more complex sales. So, the data received by GlassDoor says that the average OTE for enterprise sales reps in the United States is $1,25,000. However, it can range from $75,000 to $1,50,000

Ombir Sharma is Outreach Specialist at Tecuy Media. He is also an SEO and writer having an experience of more than 3 years in these respective fields. He likes to spend his time researching on various subjects.