OTE Is a Promise. Most Comp Plans Are Built to Break It.

The number on the offer letter is £80,000 OTE. The base is £45,000. The implicit promise is that a competent rep, working a sensible territory, hitting a reasonable quota, earns the other £35,000. That promise is made in the headline. The mechanics that govern whether it can be kept are buried in a PDF attached to the contract that most candidates skim once and never open again. This post is about that PDF.

The argument is not that companies lie. Most hiring managers believe the OTE when they quote it. The argument is that OTE is a marketing number attached to a legal document, and when the two conflict, the document wins. Every time.

What OTE Actually Means (and Doesn't)

OTE means on-target earnings: what you make if you hit 100% of quota. It says nothing about what percentage of the team hits 100%. It says nothing about whether 100% was designed to be achievable or aspirational. It says nothing about what happens at 80%, 90%, or 110%.

In most SaaS comp plans, those omissions do most of the damage.

A rep who closes 85% of quota, which is a solid result in many teams, may earn dramatically less than 85% of OTE depending on how the plan is structured. That gap is not an accident. It is a choice, usually made by finance to control cost-of-sales, occasionally made by RevOps without modelling the downstream effects on rep behaviour.

The Five Places OTE Quietly Breaks

Here is a representative SaaS AE plan. Base £45k, OTE £80k, variable £35k, quota £600k ARR annually.

1. The quota is set above the median attainment.

If 50-60% of the team is hitting quota, the quota is probably calibrated correctly for a stretch target. But most plans are not calibrated that way. The industry average for SaaS AE quota attainment hovers somewhere between 40% and 55% depending on segment and market. If your team's median attainment is 72% of quota, the median rep's OTE-equivalent earnings are not 72% of £80k. See point two.

2. The accelerator threshold is set above where most reps land.

A typical plan structure looks like this:

A rep at 85% of quota earns 100% of the variable rate on that 85%, which sounds reasonable. But the kicker payouts above 100% are the mechanism that makes the plan feel lucrative in a job interview, because the hiring manager is showing you the upside, not the median outcome. The median rep in this plan earns roughly £74,000, not £80,000. The plan is not broken. It is doing what it was designed to do.

3. The commission is calculated on bookings, not revenue collected.

Clawback clauses vary from aggressive to brutal. A common version: if a customer churns within 12 months, the rep owes back the commission, sometimes on a pro-rata basis, sometimes in full. In a SaaS business with 15-20% early-stage churn, this is not a theoretical risk. Model it. A rep closing £600k who loses two early-churning accounts worth £80k combined in Q2 may face a clawback of £4,000-5,000. That is not in the OTE number.

4. The territory is not evenly carved.

This is the one that causes the most genuine damage and gets the least scrutiny in an interview process. Two AEs with identical quotas can have territories with wildly different TAM, account maturity, and expansion potential. Territory inequality is the silent killer of OTE credibility. If you are walking into a patch that the previous rep burned, or a greenfield territory with no inbounds, your path to OTE is structurally harder than someone inheriting an installed base with renewal expansion built in.

Account Segmentation Framework for Territory Design is worth running through before you accept any offer where territory assignment is described as "TBD post-start."

5. The plan changes.

This is the one people forget to ask about. Quota is almost always reset upward annually, typically by 10-20% in high-growth SaaS. Accelerator thresholds sometimes shift. Plan design changes when CFOs change, when revenue targets change, when the company decides variable compensation is running too hot. Ask how many times the plan has changed in the last two years. Ask whether changes take effect mid-year or at the start of the next cycle. The answer tells you more about comp philosophy than any headline number.

How to Read a Comp Plan Before You Sign

These are the questions that actually matter, in order of importance:

1. What percentage of AEs hit 100% of quota last year? If they won't tell you, assume it's below 40%.
2. What was the median attainment? This is the number your OTE should be recalculated from.
3. What is the clawback policy, exactly? Get this in writing. "Standard terms" is not an answer.
4. How is my territory defined, and what did it produce last year? New logos, pipeline generated, ACV closed. All three.
5. Has the plan design or quota changed in the last 24 months? If yes, how?

Then model it. Run the actual numbers at 75%, 85%, and 100% attainment under the plan's payout structure. Most candidates do not do this because it is mildly awkward to ask for the full plan document before signing. Do it anyway. Any company that finds this question uncomfortable is telling you something useful about their comp culture.

Commission & OTE Modeller can do this arithmetic in about ten minutes if you have the plan tiers in front of you.

A Note for Sales Leaders and RevOps

If you are building or inheriting a plan, the most corrosive thing you can do to a sales team is quote an OTE that the plan's mechanics structurally prevent the median rep from reaching. Not because it is dishonest, but because reps figure it out by month three, and once they do, the psychological contract is broken. You will spend the rest of the year managing disengagement rather than performance.

The fix is not to make plans more generous. It is to make them transparent. If your plan is designed so that 100% is genuinely aspirational and 80% attainment is the practical target, say so. Build a variable structure that makes 80% feel rewarding. Stop dangling an OTE that requires top-decile performance to collect.

Quota Attainment & Payout Calculator is a useful sense-check when you are setting quotas: model what the plan actually pays at median before you publish it to the team.

The best comp plans are simple enough that a rep can calculate their own commission in their head at any point in the quarter. Most plans in the wild are not that. Most plans require a spreadsheet, a RevOps analyst, and a mild tolerance for ambiguity. That complexity is not neutral. It is a cost, paid in trust.

OTE is a promise. Make sure the document you are signing is capable of keeping it.

The tool for this: OTE Reality Check: Comp Plan Audit Checklist for Candidates, free and no signup.