Question
Heirloom Photos sells a $900 photography plan to rural customers using a commissioned sales force. Rather than pay the price up front, most customers pay
Heirloom Photos sells a $900 photography plan to rural customers using a commissioned sales force. Rather than pay the price up front, most customers pay $250 down and make 36 monthly payments of $25 each. The $900 plan includes the following:
- A coupon book good for one free sitting every six months for the next five years (10 sittings) at any Heirloom-approved photo studio. The customer receives one free 11-by-14-inch black-and-white print. Additional photos or color upgrades can be purchased at the photographer's retail prices.
- To preserve the 11-by-14-inch photos, the family name is embossed in 24-carat gold on a leather-bound photo album.
The embossed leather album, with a retail value of $300, costs Heirloom $75. Each sitting and free 11-by-14-inch print, with a retail value of $150, costs Heirloom only $50 because photographers are given exclusive rights to all Heirloom customers in a geographic region and have the opportunity to offer customers upgrades to color and/or more pictures.
The commissioned sales staff is paid on the 10th of each month, based upon the prior month's sales. The commission rates are as follows:
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