When you start your search for a sales position, you’ll see things like OTE $90,000 or $55k base, $85k OTE. But, what does this really mean?
In order to properly gauge sales opportunities, it’s important to understand the concept.
OTE, or on-target earnings, is a metric that provides the forecasted compensation for a particular position based on the expectation that you’ll hit certain performance targets.
In sales, this number is typically made up of your base salary plus your expected commissions.
Although companies often post this number with their job descriptions, take it with a grain of salt.
Some view OTE as a conservative estimate that the majority of employees are required to hit, while others view OTE as a stretch goal that only the top performers will achieve.
To get a better understanding of how much you’d make at a particular company, ask the hiring manager how the current sales team is performing based on the company’s stated OTE. What percent of them are at, below or above it?
Extra credit: Ask to see the commission report that sales submit to finance. If they don’t feel comfortable showing you, tell them to block out the names and only show you the representative average performance. This will give you the best idea of what to expect.
Since you’ll be starting with a clean slate, it’s also good to ask what the OTE including ramp typically is.
Oftentimes, the OTE number listed in a job description is based on a fully ramped rep. If you factor in the time it takes for a new employee to ramp up, there’s a good chance that number will go down.
Although ramp time is expected, make sure you know how long it will take so you can accurately calculate your expected earnings.
Bottom-line:
Understand OTE is a ballpark number representing your potential yearly earnings.
Before you accept a job offer, make sure you have an open discussion with the hiring manager about OTE and the probability of hitting it.
Keep in mind, the highest ratio you’ll typically see for base salary compared to variable pay is 50/50. Ex. 50k base 100k OTE. If you see one above that ex. 50k base 150 OTE, understand that most of that money isn’t guaranteed, be careful!
About The Author - Brianne Shelley
Brie's been an active member of the Boston startup community for the past six years and currently an Account Executive at EzCater. She's been on the ground floor helping companies rapidly grow, creating avenues for lead generation and always pushing for bigger ideas. Working in shared spaces, local coffee shops and diverse offices, she's written content for a number of different personas, successfully managed companies' social media profiles and closed deals as a top performer on the sales floor.