Sales commission and OTE explained
Commercial and sales Last checked
The short answer
On-target earnings are basic salary plus the commission you would earn hitting target in full. It is a projection rather than a promise, and the only figure that is contractually yours is the basic. The useful question is not what the OTE is, but what people in the role actually earned last year against the same plan.
The number at the top of a sales advert is usually the OTE. It is the least reliable number in the advert, and it is the one everybody reads first.
What OTE is
On-target earnings are your basic salary plus whatever commission you would earn hitting your target exactly. Nothing more complicated than that.
The split matters more than the total. A £70,000 OTE at eighty twenty means a £56,000 basic, which is a fundamentally different job from the same £70,000 at fifty fifty, where half your income depends on a target somebody else set.
Ask for the split before anything else. An advert that gives an OTE without one is describing a job you cannot evaluate.
Why the projection is the weak part
An OTE assumes the target is achievable. Whether it is depends on the territory, the product, the lead flow, the sales cycle and how the target was set, none of which appear in the advert.
The way to test it is to stop asking about the plan and start asking about last year. What proportion of the team hit target. What did the median person on the team actually earn, not the top performer. Has the target moved, and by how much.
Those three answers tell you more than any plan document. An employer with a healthy sales function answers them readily, because the answers are good.
The structures you will meet
A flat rate pays the same percentage on everything. Simple, predictable, and usually the sign of a straightforward product.
Tiered or accelerated plans pay a higher rate above target. These reward overperformance and are common where a company genuinely wants growth rather than predictability.
Gated plans pay nothing until a threshold is crossed, which concentrates risk badly if the threshold was set optimistically.
Team or pooled components share a portion across a group. Reasonable where deals genuinely need several people, and demoralising where they do not.
The terms that decide what you keep
Three of them, and all three belong in the contract rather than in a conversation.
When commission is paid: on order, on invoice, or on cash collected. Cash collected can mean months of delay and exposes you to a customer’s payment behaviour.
What happens to deals that close after you leave. Many plans require employment on the payment date, so a deal you worked for half a year can pay nothing at all. This is common and it is not hidden, but you have to ask.
Clawback. If a customer cancels or does not pay, does the commission come back, and over what period.
The ramp
Almost every sales role takes time to produce. A good employer plans for that with a guaranteed commission period while the pipeline builds, usually the first three to six months.
Ask whether there is one, how long it runs and what it guarantees. A role with a nine-month sales cycle and no ramp is asking you to fund the first three quarters of your own employment, and the OTE in the advert quietly assumes a year you will not have.
Questions people ask
What is the difference between OTE and basic salary?
Basic salary is what you are contractually paid regardless of performance. OTE is basic plus the commission earned by hitting one hundred per cent of target. If the split is sixty forty on a £70,000 OTE, the basic is £42,000 and the rest depends entirely on results. Only the basic is guaranteed, and the split is the first thing to establish.
What percentage of a sales team usually hits target?
It varies enormously by company and by how the target was set, which is exactly why the number matters. Asking what proportion of the team hit target last year, and what the median person earned rather than the top performer, turns an abstract OTE into evidence. An employer who cannot or will not answer has answered.
Do I get commission on deals that close after I leave?
Only if your contract says so. Many plans require you to be employed on the payment date, which means a deal you worked for months can pay nothing. This is a standard term rather than a trap, and it is entirely reasonable to ask about it before signing. Get the answer in the contract rather than in conversation.
Is commission capped?
Sometimes, and it is worth asking directly. A capped plan limits what an exceptional year can be worth. Accelerators do the opposite, paying a higher rate above target. Either can be reasonable, but a cap that is not mentioned until your best quarter is a genuinely bad surprise, and the answer belongs in the plan document.
Adverts for the roles in this guide
Read the adverts yourself and apply to the ones you want. Nothing here puts you in front of an employer until you decide to.
Where this comes from
Government guidance and workforce data both change. Each entry names its publisher so you can read the original rather than take our word for it.
- Office for National Statistics — Earnings and hours worked, occupation by four-digit SOC: ASHE Table 14 (ons.gov.uk) Every salary figure on this site comes from this table or its regional companion, Table 15. Open Government Licence v3.0.
- GOV.UK — Employment contracts (GOV.UK) What must be given in writing, and when.
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