Worked example
A $900,000 annual quota with a $90,000 base salary and a $90,000 variable target.
| Input | Value |
|---|---|
| Quota for the period | $900,000.00 |
| Base salary for the same period | $90,000.00 |
| Variable target (at 100% of quota) | $90,000.00 |
| Result | Value |
|---|---|
| Quota-to-OTE ratio | 5× |
| On-target earnings (OTE) | $180,000.00 |
| Quota-to-variable ratio | 10× |
| Implied commission rate | 10% |
| Variable share of OTE | 50% |
- OTE: base + variable target: $180,000.00
- Quota ÷ OTE: 5×
- Quota ÷ variable target: 10×
- Implied rate: variable ÷ quota: 10%
- Variable mix: variable ÷ OTE: 50%
Formulas
OTE = base salary + variable target
Quota-to-OTE ratio = quota ÷ OTE
Quota-to-variable ratio = quota ÷ variable target
Implied commission rate = variable target ÷ quota
All three amounts must cover the same period. An annual quota divided by a quarterly variable target produces a ratio four times too high. The OTE calculator shows pay at other attainment levels.
How to interpret the ratio
- A higher ratio means each dollar of pay must be backed by more quota: the role is cheaper per dollar sold, but harder to hit unless deal sizes, pipeline or win rates support it.
- A lower ratio means a higher cost of sales at target, which can be deliberate for new markets, long cycles or ramping teams.
- The quota-to-variable ratio is the inverse of the implied commission rate. It isolates the at-risk part of pay from the base salary.
We do not publish benchmark ranges for this ratio. The right level depends on your margins, sales cycle, pay mix and growth targets; compare it with your own past plans and with the capacity behind the quota. The quota calculator helps check that side.
Limitations
- The ratio ignores accelerators, caps and SPIFFs, which change actual pay away from 100% attainment.
- Benefits, payroll taxes and equity are not part of OTE here.
Frequently asked questions
What is a good quota-to-OTE ratio?
There is no universal answer, and we do not publish one. Use the ratio to compare your own roles and plans consistently, and check it against what your pipeline and win rates can actually support.
Is the implied commission rate what the rep earns?
It is the rate that pays exactly the variable target at 100% of quota on a flat plan. Tiers, accelerators and caps make the effective rate differ at other attainment levels.
Why does the calculator reject a zero variable target?
With no variable pay there is no quota-to-variable ratio or implied rate to compute. For a fully salaried role that still carries a quota, divide the quota by the base salary directly.