On-target earnings (OTE)

On-target earnings (OTE) is the total amount of money a sales representative can expect to earn in a year if they meet or exceed their performance goals. 

OTE includes the salesperson’s base salary, commission, and any other potential earnings, such as bonuses.

OTE is important for several reasons. First, it helps sales representatives understand how much money they can make by meeting or exceeding their goals. This can help them stay motivated and focused on their work. Additionally, OTE can help companies attract and retain top sales talent. By offering a competitive OTE, companies can show that they value their sales team and are willing to reward them for their hard work. Lastly, OTE can help companies track and manage their sales performance. By setting realistic OTE goals, companies can get a better understanding of how their sales team is performing and make adjustments as needed.

To calculate OTE, you need to add up the salesperson’s base salary, commission, and any other potential earnings. For example, if a salesperson has a base salary of $50,000, a commission rate of 10%, and a potential bonus of $10,000, their OTE would be $70,000.

Use this free OTE calculator

It’s important to note that OTE is just a forecast of potential earnings. 

The actual amount of money a salesperson makes can vary depending on a number of factors, such as the company’s sales performance, the salesperson’s individual performance, and the market conditions.

Here are some additional tips for calculating OTE:

  • Be realistic. When setting OTE goals, it’s important to be realistic about what the salesperson can achieve. If the goals are too unrealistic, the salesperson may become discouraged and less likely to meet them.
  • Be flexible. The sales environment is constantly changing, so it’s important to be flexible with OTE goals. If the market conditions change or the company’s sales performance changes, you may need to adjust the OTE goals accordingly.
  • Communicate with the salesperson. It’s important to communicate with the salesperson about their OTE goals. This will help them understand what they need to do to achieve their goals and will help them stay motivated.

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