Business, Legal & Accounting Glossary
On target earnings.
OTE is the earnings that you will receive if you meet your targets.
Often companies will offer OTE (on-target earnings) if an employee has sales targets to meet.
OTE is on target or on track earnings.
This is a term that will often be found in an advertisement for a job, especially when the advertisement is recruiting salespeople.
Normally the pay structure will have two parts to it, a fixed part of the income and then a fixed sum or percentage of the commission, together these will be referred to as the package.
There will be a contract between the salesperson and the company that will clarify how much commission a person will make on sales, or if they will receive a fixed lump sum. Sometimes it will contain a combination of both, a fixed lump sum and a percentage of the commission on sales made.
These will be obtainable if the salesperson meets or exceeds their targets. All commission plans will be unique to the company that you are working for, however, often it is that the further an individual exceeds their targets the higher the commission that they receive.
Moreover, on-target earnings (OTE) can refer to the earnings managers or directors can achieve if they meet certain goals or hit specified targets in the correct time-frame.
OTE can also be used as a definition for annual goals and targets.
OTE (on-target earnings) is used by employers to benefit their employees for their hard work. However, it should be noted that often OTE also has a positive impact on employee engagement and employee motivation. OTE is a great way to improve the productivity of your salespeople.
If your salesperson has a salary of £30,000 a year and makes a commission of £15,000 in that year their OTE (on track earnings) could be expressed as £45,000 a year.
The Role
Account Manager/Sales Executive
On Offer:
on track earnings, OTE
Generally, one fifth is considered to be good OTE and is what should be expected. This means that if a salesperson has an annual sales quota of £700,000 their on-target earnings should be around £140,000 a year.
What is often considered to be the ‘ideal’ is between 6 and 8 times the sales quota.
Please note, that these are only suggestions. The salary of your salespeople will change dependant on your industry, their skill set, how many steps there are in your sales process, how much revenue you get as well as many other factors.
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This glossary post was last updated: 2nd April, 2020 | 0 Views.