OTE stands for On-Target Earnings. It refers to the total expected annual compensation a sales rep can earn if they hit 100% of their quota. This includes their base salary plus any commission or bonuses tied to performance.
In a typical sales compensation plan, a rep might earn $60,000 in base pay and another $60,000 in variable pay if they reach quota. In that case, their OTE is $120,000. It’s a target, not a guarantee, but it sets the standard for what full performance looks like.
OTE is most commonly used in commission-based roles like Account Executives (AEs), Sales Development Representatives (SDRs), and Business Development Reps (BDRs). It’s also a critical metric for sales leaders, recruiters, and finance teams to align expectations and budget accordingly.
Why OTE Matters in Sales Hiring and Performance
For hiring managers and candidates alike, OTE gives a clear picture of earning potential. It helps sales professionals evaluate whether a role is worth pursuing and gives companies a structured way to compete for top talent.
But OTE also carries expectations. If a company lists an OTE of $150,000, strong candidates will expect a realistic path to earn that amount, backed by historical performance data, clear quotas, and supportive tools. If too few reps reach their OTE, it can hurt morale, retention, and credibility.
Well-designed compensation plans tie OTE directly to achievable results. That means quotas are data-backed, ramp periods are fair, and commission structures are transparent. When done right, OTE aligns everyone around the same goal: hitting the target and getting rewarded for it.
How Revenue Teams Use OTE Strategically
Beyond being a hiring metric, OTE also shapes territory design, sales forecasting, and incentive planning. Leaders use it to model how much pipeline each rep needs, what kind of deal size is sustainable, and how much performance varies by segment or region.
It also affects team structure. A low OTE might work for transactional sales, while enterprise roles often justify higher OTEs based on longer cycles and bigger wins. Over time, patterns in OTE performance can reveal training gaps, compensation misalignment, or untapped revenue potential.
When OTE is treated seriously, it becomes a benchmark for success for both the company and the rep.
OTE only works if reps have the support to hit their targets. Conquer helps sales teams stay on pace, follow smart cadences, and close more deals directly from Salesforce, making OTE feel less like a wish and more like a plan.
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