Move guide
Report price performance every month
Your report suggested a move on at least one of these three practices:
- whether price performance is measured;
- the analysis actually used;
- how price increases are executed.
Revenue growth can hide what price is doing. This move guide gives price its own line in the monthly numbers, separate from volume and mix. It tracks how much of each increase stuck, and puts three standard analyses on a calendar.
If you took the consumer check, go to the consumer section. If your products reach shoppers through retailers, go to the section for brands.
1. When it applies
Use this move guide if your report placed any of these three practices in the lowest two stages.
| Practice | Where it may sit today | Where this move guide aims |
|---|---|---|
| Whether price performance is measured | Lagging: "No pricing KPI exists; revenue growth hides what price is doing." Basic: "Average price or gross margin is reported as one line that mixes product, customer and volume effects." |
Competent: "Price, volume and mix are separated in monthly reporting, and realisation of increases is tracked." |
| The analysis actually used | Lagging: "Pricing analysis means looking at last year's average selling price." Basic: "Ad hoc analysis happens when there is a crisis, then stops." |
Competent: "Standard analyses (price bands by customer size, discount distribution, margin bridge) run on a calendar." |
| How price increases are executed | Lagging: "Increases are announced across the board and quietly given back account by account within months." Basic: "Increases go out annually, but nobody measures how much actually sticks." |
Competent: "Realisation of each increase is measured, and accounts that escaped are followed up." |
If all three already sit at the middle stage or higher, the next moves are in sizing, testing and making price moves.
It needs one source of pricing data first.
2. What to do
Five steps. Building the pack takes about four weeks. After that it runs monthly.
- Build the bridge. Split the change in revenue and margin into price, volume and mix. The profit bridge calculator shows the idea.
- Measure what stuck from the last increase. Realisation is the share of an announced increase that customers actually pay. Measure it account by account. List the accounts that escaped, and name who will follow each one up.
- Put three analyses on a calendar. Run price bands by customer size, the spread of discounts, and the margin bridge. The discount scatter calculator shows whether your discounts follow volume.
- Add numbers from the other steps as they land. Table A below lists them.
- Keep it to one page. Name the person who must act on each line. The pricing forum opens with it.
The three free worksheets do the recording:
- /worksheets/pricing-b2b/kpis-monitoring for the split and the one page;
- /worksheets/pricing-b2b/price-increases for realisation account by account;
- /worksheets/pricing-b2b/analytics for the three analyses and their calendar.
3. What to produce
One table, plus the three worksheets above.
Table A. What joins the pack as the other steps land
| Number | Comes from | First month in the pack | Who acts on it |
|---|---|---|---|
| Pocket price for the ten biggest customers | Seeing where the price goes | ||
| Cost to serve beside price, top twenty customers | Costing the customer | ||
| Share of deals inside the discount ladder | Taking control of discounts | ||
| Live exceptions, and those past their expiry | Taking control of discounts | ||
| Rebates paid against the behaviour they buy | Making every giveaway buy something |
4. A worked example
Illustrative. Written for this move guide. It describes no client.
An engineering components maker sells to about 400 accounts.
The bridge.
- Revenue was up 6% on the same month last year, and average selling price was up 2%.
- The bridge showed the rise in average price came from mix. Customers were buying more of the dearer product lines.
- Like for like, prices were slightly lower than a year before.
The last increase.
- A 4% list increase had gone out five months earlier.
- Account by account, about two thirds of it had stuck.
- Thirty-five accounts were still paying the old price. Each went to a named sales manager to follow up.
The calendar.
- Price bands by customer size ran quarterly, the spread of discounts monthly and the margin bridge monthly.
- The first price band run found a group of small customers paying less than the largest ones.
Two months on.
- The one-page pack opened each pricing forum.
- The minutes recorded actions taken from it, each with a name.
On a retake, all three practices could be answered at the middle stage.
What it looked like in our work
From our own work. Figures changed.
One of the standard analyses: a business's volume, by the discount off list it was sold at.
| Discount off list | Share of volume |
|---|---|
| Over 40% | 7% |
| 35% | 18% |
| 30% | 24% |
| 25% | 20% |
| 20% | 12% |
| 15% | 7% |
| 10% | 6% |
| 5% | 3% |
| At list | 3% |
Most volume sold at a quarter to a third off list, and very little at list. Run monthly, the spread shows whether discounts are drifting deeper.
What goes in the monthly pack
From our own work. Redrawn.
A distributor of business supplies tracked two kinds of measure each month. Profit measures showed what the prices earned. Behaviour measures showed whether customers were changing how they bought.
- Price and volumeTotal volume and average price.
- Cost to serveHandling cost and delivery cost, per unit.
- MixThe number of distributors, the share of volume on special arrangements, and the share of core against commodity lines.
- Order sizeThe share of orders below the minimum, the average order size, and the share ordered by the full pallet.
- Ordering patternHow often customers order, and how fast they ask for delivery.
- PaymentDays to pay, and sales by payment method.
- Terms keptWhether each customer met its trading terms, and what the scheme paid each one.
The first three cards are profit measures. The last four are behaviour measures, and they move first. A change in order size or days to pay shows up before it reaches the margin.
Discounts lined up with volume
From our own work. Figures changed.
For a specialty chemicals maker, we set each customer's discount against its sales. Discounts bore almost no relation to volume. Some small customers had larger discounts than the biggest.
Today
| Point | Sales a year | Discount off list |
|---|---|---|
| $150k | 42% | |
| $180k | 55% | |
| $220k | 36% | |
| $260k | 48% | |
| $300k | 22% | |
| $340k | 31% | |
| $380k | 18% | |
| $420k | 40% | |
| $500k | 27% | |
| $560k | 12% | |
| $650k | 33% | |
| $780k | 19% | |
| $900k | 24% | |
| $1100k | 9% | |
| $1500k | 21% | |
| $2300k | 30% |
- In line with volume: from $0k, 10% to $2500k, 32%
The aim
| Point | Sales a year | Discount off list |
|---|---|---|
| $150k | 12% | |
| $180k | 14% | |
| $220k | 13% | |
| $260k | 16% | |
| $300k | 15% | |
| $340k | 17% | |
| $380k | 16% | |
| $420k | 18% | |
| $500k | 19% | |
| $560k | 18% | |
| $650k | 20% | |
| $780k | 21% | |
| $900k | 22% | |
| $1100k | 23% | |
| $1500k | 26% | |
| $2300k | 31% |
- In line with volume: from $0k, 10% to $2500k, 32%
The dashed line is a discount that grows with volume. The right-hand panel is the aim.
The monthly report shows whether each customer's discount is moving toward the line.
Your price against the main competitor's
Illustrative. Dummy figures.
Chart your price and the main competitor's each month, and mark each move. It shows who moved first, and how far the other followed. Take the competitor's price from customers, published sources or the shelf.
| Month | Price, per unit |
|---|---|
| 1 | $100 |
| 6.9 | $100 |
| 7 | $104 |
| 18 | $104 |
| Month | Price, per unit |
|---|---|
| 1 | $98 |
| 8.9 | $98 |
| 9 | $101 |
| 18 | $101 |
- We rose 4%
- They followed with 3%
Read it with the volumes beside it. The months after each move are the evidence the elasticity is built from.
5. Effort and dependencies
- Finance analystBuilds the pack and runs the analyses.
- FinanceOwns the pack.
- Pricing forumOpens with it and acts on it.
- Sales managersFollow up the accounts that escaped an increase.
What you need
- Price, volume and margin by product and customer from one source of pricing data.
- The date and size of the last increase, and the price each account paid before and after.
How long
- About four weeks to build.
- Then monthly, with the analyses on their own calendar.
What gets in the way
- Reports that miss price. We have seen it in our own work. An industrial distributor had several standard reports, and none was aimed at pricing. Nobody reported quote success rates or what drove discounts.
- An average that hides mix. Average selling price moves when the mix moves. It can show a rise while every customer paid less.
6. How will you know it worked?
The test is whether the forum acts on the pack. Retake the check after three monthly packs. Each of these should be true when you answer:
| Practice | You can answer Competent when | A document alone does not count if |
|---|---|---|
| Whether price performance is measured | The monthly report separates price, volume and mix, and tracks realisation of the latest increase. | The split was built once, and the monthly report still shows one average price. |
| The analysis actually used | Price bands by customer size, the spread of discounts and the margin bridge run on a calendar. | The analyses ran once, when someone asked. |
| How price increases are executed | Realisation of each increase is measured account by account, and the accounts that escaped have been followed up. | Realisation is measured, but nobody has called the accounts that escaped. |
For consumer businesses
This section is for the B2C Consumer Pricing Health Check. The job is the same, with one more effect to separate: promotions.
When it applies
Use it if your report placed this practice in the lowest two stages.
| Practice | Where it may sit today | Where this move guide aims |
|---|---|---|
| Whether price performance is measured | Lagging: "Revenue is the only number; price's contribution is invisible." Basic: "Average price is tracked but mixes product and promo effects into one line." |
Competent: "Price, volume, mix and promo effects are separated in monthly reporting." |
What to do
- Build the bridge. Split the change in revenue and margin into price, volume, mix and promotion.
- Put the giveaway numbers beside it. Add markdown cost, the return on major promotions and each giveaway line.
- Keep it to one page with a name against each line. The monthly pricing meeting opens with it.
The free worksheet does the recording: /worksheets/pricing-b2c-direct/kpis-monitoring, for the split and the pack.
What to produce
Table B. The one page
| Line | This month | Same month last year | Who acts |
|---|---|---|---|
| Price effect ($) | |||
| Volume effect ($) | |||
| Mix effect ($) | |||
| Promotion effect ($) | |||
| Markdown cost ($) | |||
| Giveaways, all lines ($) |
A worked example
Illustrative. Written for this move guide. It describes no client.
A homewares retailer sells through 40 stores and a website.
- Sales were up on last year, and average price looked flat.
- The bridge showed prices up and promotions deeper. The two had cancelled out.
- Markdown cost had doubled on one category with late stock.
- The monthly meeting opened with the one page, and each line had a name against it.
On a retake, the practice could be answered at the middle stage.
Effort and dependencies
- Who. A finance analyst builds the pack. Finance owns it. Trading and marketing act on it.
- What you need. Weekly sales with a promotion flag, from one source of pricing data.
- How long. About four weeks to build, then monthly.
- What gets in the way. Promotions without a flag in the sales data. They show up as price cuts and hide the promotion effect.
How will you know it worked?
| Practice | You can answer Competent when | A document alone does not count if |
|---|---|---|
| Whether price performance is measured | The monthly report separates price, volume, mix and promotion effects, and the monthly meeting acts on it. | The split was built once, and the report still shows one average price. |
For brands selling through retailers
This section is for the B2C via trade Brand Pricing Health Check. For a brand, the monthly report sets price and trade-spend rate against target by category, channel and account, with the competitor price record beside it.
When it applies
Use it if your report placed this practice in the lowest two stages.
| Practice | Where it may sit today | Where this move guide aims |
|---|---|---|
| Whether price and trade targets are cascaded, checked and informed by the market | Lagging: "One annual price target at company level, and nobody looks at whether the market moved until the year is over." Basic: "Targets by channel, checked at year end; scan data is bought and rarely opened." |
Competent: "Price and trade-spend-rate targets by category, channel and account are monitored monthly with variances explained, and the competitor price record is read at the same meeting." |
What to do
- Cascade this year's targets onto one page. Set a price target and a trade-spend rate target by category, channel and top account. Trade-spend rate is your trade spend as a share of gross sales. Table C below does this.
- Review the page monthly. Explain each variance, and name who acts on it.
- Bring the competitor price record to the same meeting, so a variance can be read against what the market did.
The free worksheet does the recording: /worksheets/pricing-consumer-trade/targets-monitoring-and-intelligence, for the cascade, the monthly review and the meeting.
What to produce
Table C. The one page
| Level | Price target | Price actual | Trade-spend rate target (%) | Trade-spend rate actual (%) | Variance explained | Who acts |
|---|---|---|---|---|---|---|
| Category | ||||||
| Channel | ||||||
| Top account |
A worked example
Illustrative. Written for this move guide. It describes no client.
A personal care brand sells through grocery, pharmacy and discount variety stores.
- Its one price target was set at company level, and nobody checked it until year end.
- The new page set price and trade-spend rate targets for four categories, three channels and the top eight accounts.
- In the second month, pharmacy trade-spend rate ran two points over target. One fast-growing customer's promotional funding explained it, and the account manager had a date to act.
- The competitor price record sat beside the page at every meeting.
On a retake, the practice could be answered at the middle stage.
Effort and dependencies
- Who. A finance analyst builds the page. The monthly pricing meeting reviews it.
- What you need. The waterfall by customer and product from seeing where the price goes, and this year's targets.
- How long. About four weeks to build, then monthly.
- What gets in the way. Targets set only at company level. Break them down before the year starts, or the variances cannot be explained.
How will you know it worked?
| Practice | You can answer Competent when | A document alone does not count if |
|---|---|---|
| Whether price and trade targets are cascaded, checked and informed by the market | Price and trade-spend rate targets by category, channel and account are reviewed monthly, with variances explained. The competitor price record is read at the same meeting. | The targets are cascaded, but nobody looks at them before year end. |
The worked examples are illustrative.
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