All Industries, Financial Model, General Excel Financial Models

Average Order Value (AOV), Break-Even, Budgeting, Business Valuation, Campaign, Excel, Financial Analysis, Financial Modeling, Financial Planning, Pricing, Scenario Analysis, Variance Analysis

This tool is used to analyze 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.

Instructions:

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, Gross Revenue, and Net Margin of their suggested price.

Note:

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 Gross Revenue may actually be harming your bottom line Net Margin.