On-Target Earnings, also called On-Track Earnings, is the total amount a sales rep can expect to earn — usually over a year — if they hit 100% of their designated quotas. OTE includes both fixed and variable components, such as base pay, commissions, and bonuses.

You might have come across the term while looking for sales jobs online. The ad might say something like '$110,000 OTE'. In the end, however, the actual salary you end up taking home could be much higher or lower, depending on your performance.

From a company standpoint, the Quota-to-OTE ratio plays an important rule when setting OTEs. Generally, the quota should be 4-6 times the OTE. Example: If a rep's OTE is $100K, their annual quota should be around $500K ARR.