Price Volume I 

How to calculate a realized price volume changes

The Basis

Revenue is quantity multiplied by the price, this can be plotted in a graph (see left). Multiple periods can be plotted on top of each other.  As with a WAPI calculation, this should be calculated on a customer / article level and aggregated.

This quickly shows where changes in either price of quantity have an effect on volume. The ? area top right will be discussed below how to handle this.


? causes mix effect

There are two elements to the designated rectangle. Firstly, it can be assigned to either price, volume or  split in two trapezoids

Secondly, there is no filled retangle when there is growth in one axis and shrinkage in the other axis. When using a single formula for all situations to calculate the surface, the rectangle will be either calculated twice, or not at all, resulting in what most people call a mix effect.  


Types

Depending on the situation a different surface exists. Using a single formula to calculate all.

Type A & D have identical directions for both volume and price. Whereas type C has decreased prices but increased volumes.

Type A 

Increase Volume 

Increased Price

Type B 

Decreased Volume 

Increased Price

Type C 

Increase Volume 

Decreased Price

Type D 

Decreased Volume 

Decreased Price

Calculations

Type A / Type B

(P2 - P1) * Q2

Type C/ Type D

(P2 - P1) * Q1

Type E / Type F

As there is no volume in one period all variance is assigned to volume variance

S2 - S1

Type G / Type H

All variance is assigned to price variance as there is no volume but there is revenue. 

S2 - S1