How Many Times Greater Calculator – RevOps, Sales Director and Finance Team – use our free tools to ensure your rep’s targeted revenue and quotas are in line with industry standards.
Now that your OTE has been decided, Finalize your compensation plan using our salary plan template. Customize with accelerators, bonuses and more by customizing 9 variables.
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Fill out the form above to get immediate access to Kiintiö’s and OTE’s ratio calculator. For a quick primer, watch this video and you’ll be ready to start experimenting with OTE multipliers that match your company’s revenue.
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Think carnival gifts. You will see a giant plush dragon hanging in the booth. That’s your goal, and guess what? You win! But the gamekeeper gives you the key chain and tells you that it takes 10 more wins to get the dragon. Bonus – you’ll notice that it’s very rare for humans to defeat dragons.
Wow, now you’re telling me you’re off the list?! Well, the bottom of the graph is 0, so I hope you don’t have a negative quota. However, if the ratio is more than 10x in any number, you can think of this as a soft red zone. There are certainly cases where over 10x ratios are reasonable, but they are rare. Maybe it’s time to increase the amount you pay your agent.
This tool is definitely designed for SaaS companies. If you’re selling something other than SaaS, your ratio is probably higher than you are
Colleague. One thing we’ve seen work in the past is using profit quotas instead of income quotas.
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How do I use this if my agent has an Accelerator/Decelerator? For example, if they reach 80% of the quota, they will not receive 80% of the target amount.
Unfortunately, there would be a LOT of different replacement scenarios that we couldn’t account for if we tried to keep this tool simple enough for you to use. Our advice is to use this as a yardstick, not the only way to set a quota. This may mean oversimplifying the compensation plan in favor of this tool.
For the most part, no! In fact, only about 20% of SaaS companies use annual quotas, 50% quarterly, and 30% monthly. In this spreadsheet, we only use annual quotas for simplicity.
The rep ratio can be similar, but it’s affected by countless factors depending on your business. We have heard from 5-20 times depending on your company.
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We use several different sources for the figures, but the main component is a survey with Pavilion. Here are the full results.
By Quota: OTE vs. Sales: An earnings ratio calculator aimed at helping RevOps, Sales and Finance leaders determine realistic quotas and OTEs based on past performance.
To get your quota: OTE vs. My Sales:Earnings Ratio Calculator, scroll up, fill out the form, and check your inbox.
Earnings on Target (OTE) represents the total money a sales representative or account executive (AE) can earn if they reach 100 percent of their quota. The sales manager usually sets the OTE for a 12-month period and relies on this number to determine the quota.
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To calculate the OTE, take the base salary and add up the total compensation the rep will earn if they reach 100% of their quota.
For example, Amy’s base salary is $60,000 and her total compensation at 100 percent quota is $65,000. Therefore, Amy’s OTE is $125,000.
Amidst the ongoing “War on Talent”, the rise of OTEs has become very common. Trends suggest that AE will continue to buy to find the most profitable opportunities. As you might expect, the higher the OTE, the more likely one recruit will accept the offer over the other.
However, one thing to keep in mind is that OTE is not guaranteed. If a company lists an OTE of $200,000 and only 40 percent of the sales team reaches that number, that’s a red flag. Some would even say it’s false advertising. More on this later.
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Fortunately, we understand OTE. Now let’s throw a wrench into it. The wrench we call the biz multiplier.
The multiplier is how many times more quota than OTE AE. You can find it by dividing the total target quota by the OTE.
Here is an example. Ian is an AE with an OTE of $160,000. The quota is $1 million in annual recurring revenue (ARR). In this case, Ian’s quota is 6.3 times his OTE. The coefficient of Ian’s reward system, or the ratio between the quota and OTE, is 6.3.
Now, determining the multiplier for your reward plan can be tricky. (That’s why we created the Quota: OTE Ratio vs. Sales: Revenue Ratio Calculator.)
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“There are different ‘goods,’ and a lot of it depends on the revenue of your business,” says Graham.
A smaller multiplier, say 3x, often benefits the sales rep and the company if it’s a smaller organization.
Consider a company that earns $1 million in ARR. The quota set with a 3x multiplier works well for companies and representatives in this case. That is, the company compensates the representatives well for their efforts. In contrast, the income from representation is in proportion to the company’s investment in representation.
This is because companies with $100M ARR tend to dedicate more resources to supporting their reps. Resources can be large investments such as sales development teams, sales enablement, marketing and management teams. When these resources are taken into account, the cost per sale in a larger company will increase significantly compared to that of a smaller company.
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Since the costs per sale are higher in larger companies, the company cannot afford to pay, for example, 16 percent of the sales to the AE companies that close it. Instead, that 16 percent is spread across various business areas that help support the deal, including representation. In smaller companies, sales representatives collect a larger share of the deals, often for smaller contract sizes.
In short, a quota with a 5x OTE multiplier is what we consider the SaaS standard. This ratio or multiplier usually changes based on the company’s total ARR. Companies that invest more in, for example, marketing and sales should have a higher coefficient.
So how can you tell if ratios are serving your company’s representation and revenue model? Here’s Quota:OTE vs. Sales: Our earnings ratio calculator comes into play.
You can use it to create your next reward plan and set quotas. Enter your organization’s number in the editable field. Don’t forget to adjust the ARR at the top. Then see how our engine determines the Quota:OTE and Sales:Earnings ratio or multiplier.
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The top call, Quota:OTE Ratio, takes into account your base salary, target bonus, OTE and annual quota. This is, as Graham calls it, “more pie in the sky.”
This ratio takes into account the average percentage of your team that hits their annual quota. Once you’ve filled out the “Average Quota Achievement” field, our machine ranks average total sales per rep, average commission earned per rep, and average total annual revenue per rep.
When both are green, it means you are compensating your team well and they in turn are doing well.
Finally, to learn how to automate commission tracking, reporting and payments, schedule a team meeting with our team! Compare fractions, decimals, and percents to find which is greater, less, or equal.
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Comparing fractions can seem challenging; seems to be comparing apples and oranges. Fortunately, there are several ways to compare one fraction to another.
The first way to compare fractions is to convert them to decimal values. Divide the quantifier of each fraction by the denominator, then compare the decimal values.
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You can also convert a fraction to a fraction with a denominator of 100. This makes it easier to divide the numerator by the denominator.
Here’s a tip: use our fraction-to-decimal calculator to get the decimal value of a fraction. You can also refer to our decimal equation table to see the decimal equivalent of common fractions.
Another way to compare fractions is to rewrite all the fractions as equivalent fractions with the same denominator. To do this, find the greatest common denominator and then make the denominators of each fraction the same.
Start by finding the lowest common denominator, sometimes called the lowest common denominator. It is the smallest number that is equally divided by each denominator. If you’re not sure how to do that, our lowest common denominator calculator will help you find it.
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Next, convert each fraction into equivalent fractions with the same denominator. You can do this by multiplying the numerator and denominator of each fraction by the same number so that they both have the same denominator.
You can also use our corresponding fraction calculator or our corresponding fraction table
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