Once you add all this to your analysis you are starting to get a clearer picture of what impacts your sales. You could also look at the impact of discontinued products. This means that you can identify the revenue that was achieved with new products. Have you launched new products which didn't sell last year? Of course, this will grow your business. Adding more dimensionsĪnd there is no rule that says you have to stick with just these three categories because your business has other drivers, is there? Two typical ones are new and discontinued products. Particularly using the profit makes this analysis 10 times or 20 times more valuable to your insight. Instead of using revenue, you can use your contribution margins or your gross profit which will make the story even more powerful. Instead of just analyzing the growth from previous year, you can analyze the change from the budget. Once you get into Price Volume Mix variance analysis, you can get really creative with many options. Selling more products with better profit margins drives up the revenue and vice versa. Some products have better profit margins than others, which means that changes in your product mix will affect your revenue. Mix - This reflects the fact that not all products are created equal. Are you selling more of your less valuable products? That might drag your mix down. For example, are you selling higher value products this year than the last year? Then the mix will be positive. It essentially explains how your product mix affects the revenue. It does actually explain how deep the change in the structure of your products is. The mix is not about the prices and it's not about the volumes.
It's a bit vague but it adds a very important and interesting insight. Then there's this third mysterious category called " the Mix".
Did we increase or decrease the price of products in the past year and how did that drive the sales? Did it increase the volume or depress it? Are we selling more items of the same product than last year or less? What is the total effect of the volume increases? How product mix affects revenue The chart shows that 5.5% growth in sales has different sources. Take a look at how Zebra BI shows you this data:Ī Price Volume Mix analysis in Zebra BI for Power BI Selling more products at lower prices reduces your profitability if the cost of goods remains unchanged. However, volume has little effect on your profit margins. Selling more products at the same price means more revenue. Volume - This is the number of products you sell. Growth in volume normally correlates to better performance unless offset by something else. Volume is another factor driving your company's growth. The relation is pretty straightforward - increased price usually translates to improved performance. Let's take price - it is one of the key factors affecting your growth and performance as a company. This is an important way of looking at your business. But keep in mind that higher price may result in lower volumes as fewer customers decide to buy. Increased price directly translates to improved margins. It is the main contributor to the growth of margins in your business. Price simply reflects the price of your product as you sell it. Price - This is the simplest concept to understand. That is the Price Volume Mix analysis, where we can see how individual factors, such as price changes, sales volumes and product mix affected your revenue. This is a good start but there is a better way that delivers more insight. Let's take a look at a typical dashboard.Ī typical business dashboard showing variances across different dimensions Most companies do not go much further than that. Once we have that variance we can drill down deeper: explore variances by business units, geography, products and so on. Typically, when designing a business dashboard, we take revenue, gross profits, income or another KPI and compare current results to previous year, plan or another target. Why a typical business dashboard is not enough We will also discuss two different approaches to analysis and show you which will deliver better results.
#POPULAR BI TOOLS HOW TO#
Next, we will show you how to use Zebra BI visuals to visualize this analysis. We will explain the three concepts and show how to prepare your data for analysis in Excel and Power BI. In this article, we'll explore how you can improve your business dashboards by including a Price Volume Mix analysis.
#POPULAR BI TOOLS REGISTRATION#
If you prefer to watch the video, go to the PVM analysis webinar registration page, enter your details and we'll send you the webinar recording and all PBIX examples to go along with it. Note: This Price Volume Mix Analysis tutorial is based on our 1-hour webinar on the same topic.
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