Financial Model Templates

This publication delivers tools and methods to calculate and depict price, volume and mix effects. It also talks about variance analysis in general. 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 publication delivers tools and methods to calculate and depict price, volume and mix effects. It also talks about variance analysis in general. 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. Compare total revenues product-by-product and see which of them affected the revenue (profit) change to the biggest extent (both positively and negatively) 2. 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? 3. 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, the publication explains in detail how to create a horizontal waterfall chart. This is a smart and efficient type of chart visualizing variances between the numbers. It will surely make your presentations look professional and your reports - impress your clients, managers and colleagues. Compatible with all versions of Excel.