The OTE formula
OTE (on-target earnings) = base salary + variable pay at 100% of quota. The split is written as base share/variable share, where each share is that part ÷ OTE × 100. A 75/25 split means three quarters of OTE is guaranteed salary and one quarter is commission or bonus that depends on results.
Worked example: a 75/25 split
An account manager is offered $120,000 OTE at 75/25. Enter a $90,000 base salary and $30,000 of variable pay in the calculator: OTE is $120,000, the base share is 75% and the variable share 25%.
If the variable part pays out in a straight line with no accelerator, reaching 80% of quota earns $90,000 + 80% × $30,000 = $114,000 for the year. Reaching 0% still pays the $90,000 base. Many plans add a threshold below which no commission is paid, and accelerators above 100%, so check the plan document for both.
OTE splits at a glance
The split is written base/variable. A 75/25 split means 75% of on-target earnings is fixed salary and 25% is commission or bonus paid at 100% of quota. The table shows what each split pays at three common OTE levels.
| Split | $80,000 OTE | $100,000 OTE | $120,000 OTE | Typical roles |
|---|---|---|---|---|
| 50/50 | $40k + $40k | $50k + $50k | $60k + $60k | Hunters, new-business account executives |
| 60/40 | $48k + $32k | $60k + $40k | $72k + $48k | SaaS account executives |
| 70/30 | $56k + $24k | $70k + $30k | $84k + $36k | Account managers, mixed new and existing business |
| 75/25 | $60k + $20k | $75k + $25k | $90k + $30k | Account managers, renewals, senior customer success |
| 80/20 | $64k + $16k | $80k + $20k | $96k + $24k | Customer success managers, sales engineers |
Base + variable at 100% of quota. Below quota the variable part shrinks; above it, accelerators can push pay past OTE.
How to choose a split
- The more a rep controls the sale, the more variable pay: pure new business suits 50/50 or 60/40.
- Renewal, retention and team-dependent roles suit 70/30 to 80/20, because the rep controls less of the outcome.
- Check the quota against OTE: a SaaS quota is often 4–5× OTE. Much lower and selling becomes too expensive.
- Pay the variable part at least quarterly. Annual-only payouts weaken the link between effort and pay.
OTE formula in Excel or Google Sheets
Put the inputs in column B from row 2, then paste the formulas below. They work the same in Excel and Google Sheets.
| Cell | What | Value or formula | Example |
|---|---|---|---|
| B2 | Base salary per year ($) | 60000 | 60000 |
| B3 | Variable pay at 100% of quota ($) | 40000 | 40000 |
| B5 | On-target earnings ($) | =B2+B3 | 100000 |
| B6 | Base share (%) | =ROUND(B2/B5*100,0) | 60 |
| B7 | Variable share (%) | =ROUND(B3/B5*100,0) | 40 |
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Frequently asked questions
- How do you calculate OTE?
- Add the base salary to the variable pay a rep earns when they reach exactly 100% of quota. $60,000 base and $40,000 variable is an OTE of $100,000 with a 60/40 mix.
- What do 60/40, 70/30, 75/25 and 80/20 OTE splits mean?
- The first number is the base share, the second the variable share. On a $100,000 OTE, 70/30 is $70,000 base and $30,000 variable, 75/25 is $75,000 and $25,000, and 80/20 is $80,000 and $20,000. Account executives often have 50/50 or 60/40; account managers and customer success roles 70/30 to 80/20.
- How does OTE relate to quota?
- A common rule is a quota of 4–5× OTE for SaaS account executives. Much lower and sales becomes too expensive; much higher and few reps reach target.
- Does OTE include base salary?
- Yes. OTE is base salary plus target variable pay, so a job advertised at $120,000 OTE with a 75/25 split pays $90,000 of guaranteed base and $30,000 more only if quota is reached. When comparing offers, compare the base first: it is the part you are paid regardless of results.
- Does OTE include bonus, equity or benefits?
- OTE includes commission and any cash bonus tied to target, because those make up the variable part. It normally leaves out equity, benefits, pension contributions and one-off signing bonuses, so ask for those separately when you compare total compensation.
- What does OTE mean in a job description?
- It is the yearly pay the employer expects you to earn at 100% of quota, base and variable together. "$100k OTE, 60/40" means a $60,000 base and $40,000 of commission at target. Ask what share of the team reached quota last year: that tells you how realistic the OTE is.
- How does OTE work?
- OTE is what you earn in a year if you hit exactly 100% of quota: your fixed base salary plus the commission or bonus at target. Below quota you earn less than OTE and above it more, especially with accelerators. It is a target, not a guarantee.
About the author
Abdessamad Ghanem
Customer Experience & Customer Success Consultant · Founder of Clarivoxx
Abdessamad Ghanem works across Customer Support, Sales, Customer Success, Account Management and Partner Management. He writes Clarivoxx Insights for B2B SaaS professionals who own retention, adoption and customer outcomes.