Maximized Margin & Revenue Pricing Analysis
Originally published: 22/07/2021 09:45
Publication number: ELQ-99880-1
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Maximized Margin & Revenue Pricing Analysis

Determines optimal sales price for highest profitability, based on comparison of sales (demand) at two price points.

Description
About this Product:

This tool is used to analyse sales results by comparing the sales data of a product and/or service sold at 2 different prices. This can be useful when a business is investigating the best price points of their products/services to achieve the highest Net Margin.

The user simply enters the selling prices and the number of "Items" sold at a lower and higher price, and the cost to produce the product and/or service. Based on the information entered, formulas will calculate an expected price for both a Maximised Margin and a Maximised Revenue.

Next, the user can enter a Proposed Price, which will then give the quantity to sell, and expected Gross Revenue, and Net Margin at their suggested price.

Depending on Demand Elasticity (the effect of any loss of demand due to a higher price), the tables and charts then illustrate why striving for higher total sales revenue may actually be harming your bottom line Net Margin.


About the author:

Shane is from Surabaya, Indonesia, where he works as a professional Business Breakthrough Strategist managing operations on a local and international scale.

Armed with degrees in IT and Management, and with 30 years of experience with MS Excel with a focus on Data Analysis Dashboards, Shane specialises in helping business owners to improve profitability and levels of service through the implementation of effective systems and complementary marketing initiatives.

This Best Practice includes
1 Excel sheet

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