How to set OTE for a sales role
OTE is the total a rep earns at 100 percent of quota, combining base salary and target variable. Setting it right is how you attract talent and control cost of sales at once. Two levers matter: the total number and how it splits between guaranteed and at-risk pay.
Short answer
Set OTE (on-target earnings) by benchmarking total pay for the role and market, then splitting it into base and variable via a pay mix that reflects how much the rep controls the outcome. A common AE mix is 50/50. Ensure OTE is competitive, the variable is achievable at quota, and the cost of sales stays within target.
Step by step
Benchmark total compensation
Research market OTE for the role, level, and geography so your number is competitive enough to hire and retain.
Choose the pay mix
Split OTE into base and variable based on how much the rep controls the sale.
- AE roles often run near a 50/50 mix
- Complex enterprise roles skew to a higher base
- Transactional, high-control roles carry more variable
Tie variable to quota
Set the target variable so a rep earns it at 100 percent attainment, with accelerators above. The variable must be genuinely reachable.
Check cost of sales
Confirm that OTE as a percentage of the quota it supports keeps your cost of sales within target across attainment scenarios.
Review against retention and hiring
If you cannot hire or you are losing reps to comp, revisit OTE. If cost of sales is bloated, revisit the mix or quota.
How Ardovo helps
Ardovo links OTE, quota, and actual attainment so you can see cost of sales live and per rep. Rook models how a proposed OTE and mix affect total comp cost across attainment scenarios before you set it.
Frequently asked questions
What is a good pay mix for an AE?
A 50/50 split of base to variable is a common starting point for account executives, but adjust it based on control: complex, long-cycle enterprise roles often use a higher base (like 60/40 or 70/30), while transactional roles carry more variable. Match the mix to how much the rep controls the outcome.
What is the difference between OTE and base salary?
Base salary is the guaranteed pay regardless of performance. OTE is base plus the target variable a rep earns at 100 percent of quota. A rep who exceeds quota earns above OTE via accelerators; one who misses earns below it.
Should OTE include accelerators?
No. OTE is earnings at exactly 100 percent attainment. Accelerators pay above OTE for overperformance. Keeping OTE defined at target keeps the number comparable across roles and clear for both the rep and finance.