The rep hit quota. The gross margin on the deal was 11%.

Revenue quotas are easy to administer and easy to explain, and they quietly make discounting free for the one person in the building most able to give it away.

By Steve 5 min read
Abstract bridge artwork for The rep hit quota. The gross margin on the deal was 11%.

A deal closes at the end of the quarter. The revenue lands, the quota clears, the commission is paid, and the company is slightly worse off than if the deal had never happened. Nobody did anything wrong. The salesperson was paid to bring in revenue and brought in revenue. The gap sits entirely in the design of the incentive, and it is one of the most common unforced margin leaks in businesses between five and fifty million in turnover. The arithmetic nobody runs at the point of sale Discounting is…

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