In the world of incentives, debate rages on whether they must be provided on profits or revenues. There are cases when the former must hold precedence. Incentives must be provided on profits in cases where profitability is a strategy level objective. The same also holds true when it is controlled by the people executing the actual sales. Profits must also be the incentive factor when gross margin can be measured at regional scale. There may be cases where company does not want to share profitability data with sales people. In such cases, incentives must not be based on profits. In case salespeople influence price, then profits must be used as yardstick to measure incentives. The most crucial factor however is whether the target is to increase sales of high value goods. Then, profits must certainly be the deciding parameter.

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