Sales compensation is built around OTE (on-target earnings), the total pay if you hit 100% of quota, split between a guaranteed base salary and variable commission, commonly 50/50 or 40/60. Commission scales with revenue against target: for example a 24,000 commission target tied to 1 million in sales pays 12,000 at 500,000 sold and 24,000 at target. Many plans add accelerators that multiply commission above target, for instance a 2x factor at 120% of quota turns that extra 20% into an effective 40%, and decelerators that cut the commission rate below a threshold like 80% of quota to push reps toward that minimum. Some plans also split the 100% target across multiple factors such as revenue, margin, and a manager's qualitative rating (MBO).
OTE: the number hiring managers throw at you
OTE stands for on-target earnings: what you make if you hit your target. OTE is made of two components, base salary and commission. Base salary is what you get no matter what, whether you sell or not.
Take a simple example: an OTE of 48,000 a year, split 24,000 base and 24,000 commission, a 50/50 split. That split is common, though some roles run 40% base and 60% commission, or a different mix entirely if the role leans more toward account management than net-new selling. If a hiring manager says the OTE is 48K with a 50/50 split, the base works out to 2,000 a month. That base is survival money: rent, mortgage, car, basic expenses. The commission is where the real upside sits.
How commission scales with performance
In the simplest version, 100% of target equals 100% of the commission pool. If the target is 1 million in sales tied to a 24,000 commission pool, selling only 500,000 for the year gets you 12,000. Sell 2 million and you might earn 48,000 in commission.
Accelerators
Many comp plans build in an accelerator once you pass target. For example, above 100% of target, going up to 120% of quota might carry a 2x factor. That means the extra 20% counts as if it were 40%. Instead of that 20% being worth 4,800 in commission, it's worth 9,600. Not every company does this, but many do, and it's the sweet part of hitting stretch numbers.
Decelerators
The flip side is a decelerator: below a threshold like 80% of quota, the commission rate per dollar drops. Instead of earning 2,400 per 100,000 of generated revenue, a rep below 80% might only earn 1,200 per 100,000. The point of this mechanism is to push reps to work hard to clear that 80% line.
When the 100% target is made of multiple factors
Some organizations split the 100% target across multiple factors, sometimes labeled M1, M2, M3. For example: 1 million in revenue, 200,000 in margin, and a qualitative factor from your manager, an MBO (management by objectives) rating. A plan might then weight those as 50% revenue, 30% margin, and 20% MBO rating.
The MBO portion is usually manageable unless the relationship with your manager is genuinely bad or you're not doing the job, so that slice of commission should generally be considered safe. The real question to ask yourself is whether you can realistically hit the revenue and margin goals.
The takeaway
A sales role can be risky, especially with a low base salary. Before taking one, understand your real chances of hitting quota: do you have the right tools, team, product set, and territory to earn your commission. Understand whether your plan has accelerators, decelerators, and multiple weighted factors before you negotiate. Get the environment right and sales pay can be substantial, some reps close a handful of deals a year and that's enough to change their financial position entirely.
Frequently asked questions
What does OTE mean in a sales comp plan?
OTE stands for on-target earnings, the total compensation you'd make if you hit 100% of your quota. It's made of two parts: a guaranteed base salary and variable commission.
What's a typical base-to-commission split?
A 50/50 split is common in sales, though 40% base and 60% commission also shows up, and roles more focused on account management may weight base salary more heavily.
How does a commission accelerator work?
An accelerator multiplies commission earned above target. For example, going from 100% to 120% of quota might carry a 2x factor, so that extra 20% counts as 40%, turning what would be 4,800 in commission into 9,600.
What is a decelerator in a comp plan?
A decelerator reduces the commission rate below a performance threshold, commonly around 80% of quota. Below that line, a rep might earn half the normal rate per dollar of revenue, which pushes reps to clear the threshold.
Can a sales target be based on more than just revenue?
Yes. Some plans split the 100% target across multiple weighted factors, such as 50% revenue, 30% margin, and 20% MBO (a manager's qualitative rating), rather than tying commission to a single revenue number.