A recently opened car dealer uses an incentive compensation plan for its sales people. The dealer provides money to its salespeople to cover basic living expenses and then shares a fixed percentage of the selling price of each car that a salesperson sells. However, the salesperson should repay the subsistence pay component within a year; otherwise he/she cannot continue in the employment of this dealer. What type of sales compensation plan does this dealer adopt?

Question

Harold Brennan

Business

11 September, 11:19

A recently opened car dealer uses an incentive compensation plan for its sales people. The dealer provides money to its salespeople to cover basic living expenses and then shares a fixed percentage of the selling price of each car that a salesperson sells. However, the salesperson should repay the subsistence pay component within a year; otherwise he/she cannot continue in the employment of this dealer. What type of sales compensation plan does this dealer adopt?

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Patience Ferguson · Answer 1

Answer:Commission

Explanation:Commission:This can be defined as a money paid to an agent, workers in a business transaction. The car dealer in question would prefer to adopt commission so as to minimize his expenditure and also increase production. Because the workers or staffs will tend to work harder if found that they would be compensated for their input.