Price-Volume-Mix Analysis
  • Price-Volume-Mix Analysis
  • Price-Volume-Mix Analysis
  • Price-Volume-Mix Analysis
  • Price-Volume-Mix Analysis
  • Price-Volume-Mix Analysis
  • Price-Volume-Mix Analysis
Originally published: 25/06/2020 06:41
Last version published: 24/07/2020 08:47
Publication number: ELQ-25560-3
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Price-Volume-Mix Analysis

Tools and methods to calculate and depict price, volume and mix effects

Description
This set of tools, methods and techniques will help you calculate and depict variances. A special focus is made on determining price, volume and mix effects.

If your company sells more than one product, you will at some point start wondering which products and to what extent were driving the change in total revenue or profit. This can be the change between current and prior year, or between budget and actual.

As such, the following types of analysis will come in handy:

1. See the changes at a glance using professionally designed magazine-quality charts and dashboards.

2. Compare total revenues by product and see which of them affected the revenue (profit) change to the biggest extent (both positively and negatively)

3. Price elasticity - estimate how reactive the market is to price change. Has the change in prices led to a change in volumes? Has the price increase brought in higher revenues or were they swallowed by reduced volumes? Have you been better off reducing prices this year in terms of the total change in profits?

4. Split the revenue change into three components: price effect, mix effect and volume effect. Have we done a good job pushing the volumes? Have we given enough effort to selling more expensive (profitable) products? Have we made a trade off between volumes and prices?

As a bonus tip, the publication explains in detail how to create a horizontal waterfall chart. This is a smart and efficient type of chart visualising variances between the numbers. It will surely make your presentations look professional and your reports - impress your clients, managers and colleagues. This chart is compatible with all versions of Excel.

This Best Practice includes
1 Excel file, 1 PDF file

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Further information

Calculate price, volume and mix effect; analyse total revenue change by product

Any business selling more than one product

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