A financial quota is a quote that concentrates on financial criteria such as gross margin or, alternatively, contribution to overhead. Financial quotas are used to make salespeople aware of the cost as well as profit implications of what they sell.
Financial quotas are very often stated in relation to direct selling costs, gross margin or net profit. These are most applicable when the firm’s market penetration gets close to saturation levels. In such instances, increasing sales or market share is challenging so an emphasis on selling efficiency as well as cost control becomes a logical mechanism for increasing profits.
What Are Expense Quotas?
Expense quotas are linked to selling costs with a realistic timeframe. Very few businesses set quotas for expenses to different sales levels to be achieved by the salesperson. The sales team could be given an expense budget that is a percentage of a particular region’s sales volume. The salesperson should spend only that sum as expenses.
What Are Gross Margin Or Contribution Margin Quotas
This type of quota is designed in order to motivate the sales team to achieve the pre-determined benchmark profit for each product sold to exceed .the actual expenses involved with selling the product.