[teaspoon]

In the common case, selling someone $50,000 of licenses is a $50,000 win for the company.

That actually sounds like a very uncommon case. Even fully client-side software has variable costs in the form of support costs.

Support costs aren't relevant to your parent's example, but they do imply another misalignment of incentives. If a salesperson's commission is based on revenue alone, she'll just as soon sell to a costly, high-maintenance customer as to a profitable, low-maintenance one.

[tptacek]

This is also a wrinkle that comes up managing sales organizations, which is why sales account managers often get different comp rates for different products.

Again, just two issues I have here:

(1) Dev incentive comp and sales incentive comp aren't particularly comparable.

(2) Huge compensation for the best sales managers is an economic reality, not a philosophical issue, and if you're not going to compensate variably, you're shifting a lot of risk from the sales manager back onto the company.