Dear SaaStr: What’s the Relationship Between OTE and Quota for a SaaS Salesperson? | SaaStr

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Dear SaaStr: What’s the Relationship Between OTE and Quota for a SaaS Salesperson?

In most SaaS companies, a sales rep’s quota is in the end 3x-5x their OTE (i.e., salary + target bonus).  Generally low with smaller deal sizes and SMBs, and generally approaching 5x in the enterprise and with bigger deals.

Here’s why:

  • A rep working on $3k-$10k deals often can close about $400k-$450k a year.
  • A rep working on $20k-$40k deals often can close about $600k-$800k a year.
  • A field rep hunting “Big Deals” (six figures and up exclusively) usually has a quota of $1m-$1.5m and up.

Divide those numbers by 3x-4x or so on the low end, 4x-5x on the high end, and you back into a market-correct OTE.

You can push as low as 3x for SMB deals if there are a ton of inbound leads. But that multiple is too low for bigger deals, especially if the cost of marketing, support, onboarding, etc. is high.

And in the early days, the sales team can sometimes be hyper-efficient, and you can sometimes do much better than 5x.  But this doesn’t scale.  Don’t expect it to.

(note: an updated SaaStr Classic answer)

And a related post here:

A Framework For Your First SaaS Sales Comp Plan

Published on March 3, 2022

Go to Publisher: SaaStr
Author: Jason Lemkin