Direct sales force

Market share (%) Market share in $ Units # of salesperson Fixed salary

1% 500,000 20,833 10 12500
2% 1,000,000 41,667 21 25000
3% 1,500,000 62,500 31 37500
4% 2,000,000 83,333 42 50000
4.80% 2,400,000 100,000 50 60000

Contractual sales force

Market share (%) Market share in $ Units # of salesperson Commission

1% 500,000 20,833 10 70,000
2% 1,000,000 41,667 21 140,000
3% 1,500,000 62,500 31 210,000
4% 2,000,000 83,333 42 280,000
4.80% 2,400,000 100,000 50 336,000

Comparison
Direct sales c
Market share (%) Direct sales cost Contract sales cost 1800000
1% 422500 320000 1600000
2% 695000 640000 1400000
3% 967500 960000 1200000
4% 1240000 1280000

Sales cost
1000000
4.80% 1458000 1536000 800000
600000
400000
As we can see from the graph, number of units sold plays 200000
a very important role in choosing the salesforce.
0
At first contractual sales force was less expensive. 1%
But after 3% market share target, the contractual sales cost
increase than direct sales cost.
Direct sa

Direst sales force

Market share (%) Market share in $ Units # of salesperson Fixed salary

3.15% 1,575,000 65,625 33 39375

Contractual sales force

Market share (%) Market share in $ Units # of salesperson Commission

3.15% 1,575,000 65,625 33 220,500
Approximately around 3.15% is the point where the sales point meet
 Commission overhead varaible cost Total cost
10,000 150000 250,000 422500 Total market share 50,000,000
20,000 150000 500,000 695000 Selling price per unit 24
30,000 150000 750,000 967500 variable cost 12
40,000 150000 1,000,000 1240000 We can take only upto 4.8% because beyond that we don't ha
48,000 150000 1,200,000 1458000
Productivity per month 2000

Salary for sales person (Fixed) 1200

Variable cost Total cost
250,000 320,000 Commission cakculation 0.48
500,000 640,000
750,000 960,000 Contract commission 14%
1,000,000 1,280,000
1,200,000 1,536,000

Direct sales cost VS Contract sales cost

1800000
1600000
1400000
1200000
Sales cost

1000000
800000
600000
400000
200000
0
1% 2% 3% 4% 5%
Market share

Direct sales cost Contract sales cost

Commission overhead varaible cost Total cost

31,500 150000 787,500 1008375

Variable cost Total cost

787,500 1,008,000
e beyond that we don't have information about overhead expenses