In a capitalistic business model, business managers are interested in maximizing the total revenues they get in their business operations from the sales of their products from this revenue, after deducting various costs, the firm earns a profit revenue-maximization problems in economics study how to arrive at this. The objective of maximising sales revenue rather than profits was developed by economist william baumol whose work focused on the decisions of manager-controlled businesses.
Revenue maximization for the firm occurs at the point where the firm gets the maximum total revenue it can for its output this is the point where the firm cannot add to its total revenue by selling more units.
Sales maximisation is an alternative to profit maximisation as an objective for a business revision video: sales maximisation diagram explanation sales maximisation as a business objective - revision video.
Sales maximization theory is based on the work of american economist william jack baumol the theory attempts to draw a conceptual framework to better understand the objectives and strategies of corporations operating in a competitive marketplace. Revenue vs profit maximization revenue vs profit maximization historically, profit maximization has been given quite a lot of importance as the main objective of any business but, in a practical scenario, revenue maximization holds true profit maximization as an objective has a number of limitations why revenue (sales) maximization and.
Sales maximization and profit maximization are distinct business objectives sales maximization is an approach to business where the company's primary objective is to generate as much revenue as. Maximising sales revenue is an alternative to profit maximisation and occurs when the marginal revenue, mr, from selling an extra unit is zero revenue maximisation - example in the example below a small firm produces tennis rackets, and sells them in boxes of 10 to retail stores. Revenue maximization revenue is essentially another word for sales, or how much of the good or service that your business produces is sold to consumers. Revenue vs profit maximization historically, profit maximization has been given quite a lot of importance as the main objective of any business but, in a practical scenario, revenue maximization holds true profit maximization as an objective has a number of limitations why revenue (sales) maximization and not profit maximization.
Why some firms go for profit and others for sales/revenue explaining the different motivations between seeking to maximise profit and seeking to maximise revenue why some firms go for profit and others for sales/revenue one thought on “ profit v revenue objectives for firms.
Sales maximization is a business approach that focuses on making the most sales revenue possible without the business taking a loss baumol's theory of sales revenue maximization outlines a model.