"Fog Creek have taken on the sales risk entirely from the sales staff. It's not a one-way trade."
I suppose. But without sales, they would be out of business. They take this risk on regardless of what they are paying their sales staff (Business is all about taking risk).
I wonder what percentage they were actually giving their sales staff..10%..20%? I doubt it was over 50%, so they aren't really increasing their risk by that much.
> so they aren't really increasing their risk by that much.
The rate of commission is not where the risk lies. Commissions are, from a short-term perspective, risk-free for the business. If the sales staff don't sell, you pay them less; the risk of divergence between revenue and expenses is lessened. The incidence of risk is pushed onto the sales staff.
If expenses are fixed but revenue is variable, then you face higher risk as a business.
In this case Fog Creek are taking the incidence of downside risk on themselves; in exchange for the loss of upside risk they will pay higher fixed wages.
I suppose. But without sales, they would be out of business. They take this risk on regardless of what they are paying their sales staff (Business is all about taking risk).
I wonder what percentage they were actually giving their sales staff..10%..20%? I doubt it was over 50%, so they aren't really increasing their risk by that much.