Jen David 
Make sure you're fairly paid by understanding OTE
When you're in the process of transitioning to a new job, you may find all sorts of unfamiliar terminology being thrown around. Do you know the meaning of OTE, total remuneration, pro rata, base pay, and FTE? It's fair to assume that most people only work for the salary, so understanding what you're signing up for is key. In this blog, we'll be demystifying what OTE means, so buckle up and we'll dive in!
What does OTE mean?
Before we even begin, let's answer the most basic question – what does OTE stand for? That's an easy one – OTE means on-target earnings. It's not a guaranteed salary, it's simply what you can expect to make if your performance is on track. You may end up taking home more or less than the amount specified.
You'll usually be paid a base salary, which you can then enhance by hitting targets. In other words, you'll earn more through commission or bonuses.
What is the difference between capped and uncapped OTE?
Now we've discussed what OTE means for salaries, let's look at the different types:
Capped: You'll receive your basic salary, plus any commission you earn, up to a set limit. Your income won't go above the capped limit, whether you just barely achieve your targets or you smash them out of the park.
Uncapped: You'll still receive your basic salary, but there's no limit to how much extra you could earn. If you significantly exceed your targets, you'll take home significantly more money.
What sort of roles use OTE?
OTE salaries tend to be used in certain roles where performance can easily be measured. It's a particularly popular method of payment in sales roles, where great performance leads to additional, measurable income for the business.
Salaries for jobs such as sales representative, sales manager, account executive, and estate agent are often based on OTE.
Are OTE jobs worth it?
As the final salary isn't set in stone each month, jobs that pay OTE can be best suited either to those who can take the hit in leaner months or those that have the experience and track record to be confident they'll hit their targets regularly.
Despite being an uncertain source of income, OTE has its benefits. The main advantages are the unlimited earning potential if you excel in your role and the motivation to perform well every day. Drawbacks include fluctuating income and potentially unrealistic targets.
Expert tip: To make an informed decision on whether an OTE role is right for you, thoroughly research the company and its expectations.
Examples of OTE
Let's look at some examples of OTE in practice.
Example 1:
A sales representative job is advertised at £50,000. This comprises a base salary of £42,000, with the potential to earn a further £8,000 in commission and bonuses. The sales representative is guaranteed to earn the £42,000, but not the £8,000. The £8,000 will only be paid if their performance is on track.
Example 2:
Andy is selling new cars. He needs to sell 10 cars each month to earn his commission. If he sells two of the new models, he receives a £500 bonus.
In April, he sells 11 cars but none of the new model. He earns his base salary, plus his commission, but no bonus.
In May, he sells 9 cars and one is the new model. He earns his base salary, but not his commission or his bonus.
In June, he sells 10 cars, including two of the new model. He's earned his base salary, plus his commission and his bonus.
Example 3:
Luiz has an uncapped commission structure, with OTE of £40,000. He sells far more than his targets, so he ends up taking home £43,000.
Izzy has the same OTE, but works at a different company where her commission is capped. Like Luiz, she also exceeds her targets, but still takes home £40,000.
Position yourself for higher pay
Now that you know what OTE means, ask yourself if it's a pay structure that can work for you given your skills and experience. While doing that, make sure that your CV – your personal sales brochure – shows employers your worth and enables you to access the (OTE or non-OTE) jobs you want.
Not convinced that your CV is selling you as well as it should? Why not send it for a free CV review to receive expert advice on how to improve it and position yourself for higher-paid roles.