Sales maximisation is a business strategy where managers try to increase total revenue and market share rather than focusing on short-term profit. The main goal is to sell as many units as possible, often by lowering prices to grow the company’s influence in the market.

How the model works:

• The firm aims to reach the highest possible total revenue (Price × Quantity).
• The ideal production level is reached when marginal revenue (MR) equals zero.
• Producing more units than this point will cause total revenue to drop because the lower price required to sell the extra stock outweighs the money earned from more sales.

Reasons why firms choose this strategy:

• Market dominance: Selling more products helps companies lower costs per unit, gain power over suppliers, and stop competitors from entering the market.
• Managerial rewards: Executives often receive better pay and higher status for managing larger companies with high sales numbers.
• Good impression: High sales figures show investors and lenders that a company is strong and successful.
• Future growth: By controlling more of the market now, the company may earn higher profits in the long run.

Limitations:

• It does not consider costs; if a product costs more to make than it earns in revenue, the company will lose money.
• It can be risky if average costs become higher than average revenue.
• It is less useful in markets where customers care more about brand loyalty or special product features than about low prices.