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View Full Version : Help with Probabilities for Sales Organization



Highlow
11-02-2015, 12:32 PM
I am creating a bonus structure for a sales organization and want to include probabilities in the pay scale. Sales people would receive a bonus at the following sales levels:

$10,000
$20,000
$30,000

There is a 90% chance they will hit >$10,000 in a single month
There is a 80% chance they will hit >$20,000 in a single month, and
There is a 50% chance they will hit >$30,000 in a single month.

We are budgeting bonuses of $500 for each additional level. There are many instances where the salesperson would fall between two bonus levels and not hit the next bonus level. I was hoping to use odds/probabilities to make the pay scale fairer to the sales staff. For example:

Instead of offering $500 for the first level I would offer $500/.90 = $555.55

Iím struggling to quantify the NEXT bonus. We would have already paid the first bonus level, and the sales person has already reached $10,000. There is an 80% chance they will reach a total of $20,000, how do I express the difference between the 90% of reaching 10k and 80% of reaching 20k?