An Optimal Commission Plan for Salesmen's Control Over Price

1 April 1975

journal article
Published by Institute for Operations Research and the Management Sciences (INFORMS) in Management Science

Vol. 21 (8) , 937-943
https://doi.org/10.1287/mnsc.21.8.937

Abstract

If marginal costs are constant, salesman who are paid a commission based on gross margin and who are given control over price will set prices so as to maximize simultaneously their own income and the company's profits. The result holds even if a salesman can only make a probabilistic estimate of sales.

Keywords

PRICE
MARGINAL COSTS
PROBABILISTIC ESTIMATE
COMMISSION PLAN
SALESMAN WHO
RESULT HOLDS
SALESMEN'S CONTROL
OPTIMAL COMMISSION

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