Definition
- Revenue maximisation
- Revenue maximisation is producing where total revenue is largest, where marginal revenue is zero, often because managers' pay or status rises with revenue.
Example
Can you think of an example of revenue maximisation?
A software firm's directors earn bonuses tied to turnover. They cut the subscription price until one more sale would add nothing to revenue, well past the most profitable price.
Test yourself
Can you name the five objectives a firm might pursue other than the most profit?