Which one of the following forms of commission rate may actually result in overselling and higher selling costs to the company?

Question

Business

Wendy Gregory

15 June, 15:26

Which one of the following forms of commission rate may actually result in overselling and higher selling costs to the company?

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Answers (1)

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Anneliese · Answer 1

progressive commission rate

Explanation:

Progressive commission rates are simply commissions that increase as the total sales volume increases, e. g. for example, the commission rate for the first 100 units sold is 2%, from 101-200 units sold the commission rte is 3%, and over 200 units sold the commission rate is 4%.

The main advantage of a progressive commission rate is that it encourages higher sales volume. The main problem is that it may result in higher costs (depending on the applicable commission rates) and eventually overselling during certain periods. For example, the salespeople will try to bring together all their sales this month to get higher commissions at the expense of lower sales next month.