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On Target Earnings" (OTE) is a term commonly used in compensation plans, particularly in sales and commission-based roles.
It refers to the expected total compensation that a salesperson or employee is anticipated to receive if they meet their performance targets or quotas.
OTE includes both fixed components, such as base salary, and variable components, such as commissions or bonuses. It provides salespersons with a clear understanding of their earning potential based on their performance, helping to motivate and incentivize them to achieve their targets.
An example of OTE (On-Target Earnings) could be a sales rep with a base salary of $60,000 and an on-target commission of $40,000. If the rep hits all their sales goals, their total annual OTE would be $100,000.
OTE (On-Target Earnings) is the total expected earnings a salesperson can make if they meet 100% of their performance goals. It includes base salary plus variable components like commissions or bonuses.
OTC (On-Target Commission) refers specifically to the commission portion of OTE that a rep earns for hitting sales targets.
OTE salary includes both the fixed base salary and the variable commission or incentive pay. The base salary is guaranteed, while the rest of the OTE is performance-based and depends on meeting sales goals.
Target earnings typically refer to the total expected income an individual aims to earn within a specific period, often in a sales or performance-based role. It may include:
These components combined offer a full view of an individual's earning potential.
Total on-target earnings" (OTE) typically refers to the total compensation an individual can expect to receive, including both base salary and potential additional earnings such as commissions, bonuses, or incentives.
For example, if a job posting states that the total on-target earnings for a sales role are $80,000, it means that the expected total compensation, including base salary and potential commissions or bonuses, is $80,000.
When discussing salary expectations with an employer or during a job interview, it's essential to clarify what components make up the total on-target earnings and understand how they are structured. This helps ensure that both parties have a clear understanding of the compensation package being offered and expected.
On-target earnings (OTE) can be realistic if they’re based on achievable performance metrics and aligned with market standards. However, their accuracy depends on:
Ultimately, realistic OTEs are transparent, data-driven, and reflect average performance—not just top earners.
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