On-target earnings (OTE)

On-target earnings (OTE) is a salesperson's total expected pay when they hit 100% of quota, combining base salary and commission. A 120,000 OTE on a 50/50 split means 60,000 guaranteed base and 60,000 commission earned by hitting target. It's the headline number you advertise a sales role at, and it sets expectations on both sides about what good performance pays.

For a founder, OTE matters because it ties pay to results and protects your cash. A lower base with higher commission upside reduces fixed cost and rewards closers, but too aggressive a split scares off good candidates who need stability during ramp. The other rule of thumb: a rep's quota should be roughly four to six times their OTE, so the role generates far more than it costs. Get the structure right and your sales hire is self-funding; get it wrong and you're paying full salary for unproven output.