The profit maximisation theory has been criticised for being unrealistic.

The criticism is made because the owners of the firm may not be the decisions makers. For instance, with public limited companies the shareholders are the owners, however, the managers run the organisation.

An alternative concept is the short run sales revenue maximisation theory (associated with Baumol).

The theory implies that managers will seek to maximise the number of sales. The reason for this is that managers may be judged by the level of sales. This is becoming increasingly important as the role of managers is becoming more focussed towards the sales function. In addition, manager's salaries, power and prestige may depend directly on sales performance.

To add further realism, an additional constraint for sales maximisation maybe that the shareholders will require a minimum profit level (and dividend) to keep them happy. Therefore, the managers may also be profit satisficers. This is where the decision makers in a firm aim for a target level of profit, with the aim of keeping all stakeholders in the company satisfied.

Sales revenue is maximised at where total revenue is greatest, i.e where MR equals zero.

The price and output decisions of the firm will differ depending on which maximising theory the firm. For instance,

Sales maximisation will have a higher output level and lower price level compared to the profit maximisation.