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On-Target Earnings Model Explained

OTE has many names, acronyms, and is arguably one of the most popular sales commission models. This video explains definitions and examples of how OTE plans work and can be used in your organization.

On-Target Earnings (OTE) has many names and acronyms; Total Compensation (TC), On-Target Commission (OTC) and On-Target Incentive (OTI) are three variations of what is arguably one of the most popular commission models globally.

OTE Model Explained

Performio has been designed to help Sales Comp administrators easily manage OTE plans. Learn how you can better manage OTE plans with Performio by reading below and watching this video.

The video walks through definitions and examples of how OTE plans work when designing commission plans for recurring revenue businessess.

Then it calls out the enormous range of plan permutations that are possible. For example. On Target Earnings is the sum of base salary plus On Target commission. For example $60,000 salary + $30,000 OTC = $90,000 OTE. Pretty simple eh? But we'll walk through all the different combinations of how you can slice the OTC in terms of monthly ($2500), quarterly $7500, semesterly ($15000) amounts; how these amounts can be accumulated over the 12 months of the year or treated as discrete amounts; how the measurement of performance can likewise be sliced across these different time dimensions; how you can apply true-ups and a few more permutations again.

The video finishes with how Performio makes it possible to set up any of these plan permutations out of the box in minutes using the pre-built Target and Payable components.


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