On-Target Earnings (OTE) is the total expected annual compensation when a salesperson hits 100% of their quota, combining base salary plus variable pay (commission and bonus).
What is OTE in sales compensation?
On-Target Earnings (OTE) is the total annual cash compensation a salesperson earns when they hit 100% of their quota. It includes base salary plus variable pay (commissions and bonuses). For VP Sales roles, The CRO Report's data shows the typical OTE is 1.5x-2x base salary, meaning a VP Sales with a $200K base would have an OTE of $300K-$400K.
OTE represents what you should earn if you perform at target. It includes base salary, commission, bonuses, and sometimes accelerators. OTE is the standard way companies communicate total compensation for sales roles.
OTE Components
OTE = Base Salary + Variable Pay at 100% attainment. For VP Sales roles, the typical split is 60-70% base and 30-40% variable. A VP Sales with $250K base and a 60/40 split has an OTE of $417K, meaning $167K is variable compensation tied to performance against quota. Some roles also include equity and benefits on top of OTE, which can substantially change the total compensation picture. At pre-IPO companies, equity grants of $500K-$2M+ over 4 years are common for VP Sales and CRO roles, effectively doubling or tripling the cash OTE.
VP Sales OTE Benchmarks
Based on our analysis of current job postings, VP Sales OTE ranges from $300K to $600K+ depending on company stage and location. CRO OTE can exceed $700K-$1M+ at growth-stage and public companies. Equity is increasingly a major component, especially at pre-IPO companies.
Negotiating OTE
When evaluating an OTE offer, ask about quota achievability, accelerators above 100%, and how many reps historically hit target. An OTE of $500K means nothing if the quota is unrealistic and no one has ever achieved 100%. Focus on the guaranteed base and realistic variable earning potential.
Common Mistakes with OTE
Accepting an OTE number without investigating what percentage of the team earns it. A company can post a $400K OTE, but if average attainment is 55% and the comp plan has no floor, real earnings are closer to $280K. Always ask three questions in the interview: what percentage of reps hit 100% of quota last year, what does the comp plan pay at 70% attainment, and is there a draw or guarantee during ramp? The OTE is a marketing number. The comp plan mechanics determine what you'll take home.
In Practice
VP Sales compensation typically follows a 60/40 or 70/30 base-to-variable split. A VP Sales with $300K base and 60/40 split has an OTE of $500K, meaning $200K is at risk. At growth-stage startups, equity can double or triple the effective OTE. A VP Sales earning $350K cash OTE with $1M in equity over 4 years has effective annual comp of $600K. The equity component explains why some candidates accept lower cash OTE at pre-IPO companies compared to what public companies offer.
Real-World Example
A VP Sales candidate received two offers. Company A: $350K OTE (70/30 split), $245K base, $105K variable, at a Series D company where 65% of reps hit quota. Company B: $450K OTE (55/45 split), $248K base, $202K variable, at a Series B where 40% of reps hit quota. Expected earnings at Company A: $245K + ($105K x 0.95) = $345K. Expected earnings at Company B: $248K + ($202K x 0.60) = $369K. The gap narrows dramatically when you factor in attainability. Company A also offered $800K in equity with a clearer path to liquidity. On total comp, A was the better deal despite the lower OTE headline.
