Total Target Compensation (TTC), also known as On-Target Earnings (OTE) or target compensation, is the total annual compensation an employee can expect to receive when achieving 100% of their set goals. TTC includes both the fixed base salary and the variable pay at full target achievement.
For example: If a salesperson has a base salary of $80,000 annually and variable pay of $40,000 at 100% quota attainment, their TTC is $120,000 annually. This figure represents expected earnings - not a guarantee, but a realistic target based on achievable performance goals.
Total Target Compensation is a crucial concept in modern compensation strategies for several reasons:
TTC enables companies to compare their compensation packages with the market in a meaningful way. When a candidate evaluates job offers, TTC is the most relevant comparison basis, as it shows the real earning potential rather than just the base salary.
By clearly communicating TTC from the start of the employment relationship, clear expectations are created between employer and employee. The employee knows exactly what is possible to earn and what is required to reach this level.
For the company, TTC is an important tool for budgeting labor costs. By knowing the expected TTC for each role, the finance department can better predict total compensation costs.
TTC typically consists of the following elements:
The fixed portion of compensation paid regardless of performance. Base salary provides the employee with financial stability and security.
The performance-dependent portion of compensation paid upon achieving specific goals. For salespeople, this typically consists of commission or bonus.
Some companies include additional elements in TTC:
Let's look at concrete examples of TTC calculations for different roles:
Compensation Structure:
Compensation Structure:
Compensation Structure:
It's important to understand the difference between TTC and actual earnings:
If an employee only achieves 80% of their quota, actual earnings will be lower than TTC. With a base salary of $80,000 and variable pay of $40,000 at 100%, 80% performance would yield:
With overperformance, actual earnings can significantly exceed TTC, especially if the compensation plan includes accelerators:
Pay mix describes the ratio between base salary and variable pay in TTC. Typical pay mix distributions:
The choice of pay mix affects both the employee's risk and motivation. A higher variable element creates stronger incentives but also greater income fluctuations.
TTC varies significantly by industry, geography, and role. Here are typical ranges for SaaS sales roles in the US market:
To ensure clarity and avoid misunderstandings, companies should:
Include the TTC range in job listings so candidates can assess whether the role matches their expectations.
Clearly show how TTC is composed and what is required to achieve full variable pay.
Include a detailed description of TTC and the compensation plan in the employment contract or a separate addendum.
Use software to give employees real-time insight into their performance and expected earnings relative to TTC.
To fully understand TTC, it's helpful to know these related terms:
Keeping track of TTC and actual earnings for your entire sales team can be complex, especially when compensation plans include accelerators, decelerators, and various bonus elements.
Prowi is a commission calculation and management platform that gives both management and employees full visibility into:
Book a demo today and see how Prowi can give your team complete transparency around compensation.