Reference
How to measure price increase realisation
Price increase realisation compares the realised price after an increase with the planned target and the prior baseline. Calculate it on matched customer and product lines at actual volume. Report volume and mix changes separately.
Keep three prices separate
Use a consistent period, unit, currency and customer-product match for each line. Record the prior baseline, planned target and actual realised price as separate fields.
| Field | Meaning |
|---|---|
| Baseline net unit price | Prior realised price after discounts and rebates already in place before the increase |
| Planned net unit price | Intended price after the increase, preserving baseline discount terms unless the plan changes them |
| Actual net unit price | Actual price, fully net of discounts and allocated rebates or credits for the period |
The baseline discount is part of the starting position. Match customer, product and period so existing discounts remain in the baseline. Record new price-rise concessions separately. The pocket price waterfall includes invoice and off-invoice items such as rebates, payment discounts and freight, as described in McKinsey's pricing article.
Calculate price realisation at actual volume
For each matched customer, product and period, multiply each price difference by actual units. This isolates price on the units sold. It does not forecast total revenue or volume response.
Planned uplift at actual volume = Σ (planned net unit price − baseline net unit price) × actual units
Realised uplift at actual volume = Σ (actual net unit price − baseline net unit price) × actual units
Difference from plan = planned uplift at actual volume − realised uplift at actual volume
Show the planned and realised uplift beside the difference. A positive difference means the realised uplift fell short of plan. A negative difference means it exceeded plan. These amounts measure revenue retained against plan at actual volume. They do not measure profit.
Actual volume keeps the planned and realised price comparisons on the same units. Report volume movement against the baseline period separately. Report product and customer mix separately when the comparison set changes.
Worked example: one product and customer
The figures below are invented for illustration. Assume one product, one customer and comparable twelve-month periods. Baseline volume was 1,000 units.
| Step | Per-unit price or volume | Calculation |
|---|---|---|
| Prior list price | A$100 | Given |
| Existing baseline discount | A$10 | Already in place before the increase |
| Baseline net price | A$90 | A$100 − A$10 |
| New planned list price | A$105 | 5% above the prior list price |
| Planned target net price | A$95 | A$105 − existing A$10 discount |
| Actual net unit price | A$93 | Fully net, including an allocated A$1 rebate or credit |
| Rebates and credits per unit | A$1 | Reconciliation detail, already included above |
| Actual volume | 800 units | Given |
Planned uplift at actual volume is (A$95 − A$90) × 800, or A$4,000. Realised uplift at actual volume is (A$93 − A$90) × 800, or A$2,400. The difference from plan is A$4,000 − A$2,400, or A$1,600.
The A$2 per unit below target represents A$1,600 in price giveback across 800 units. The A$1 rebate or credit is shown for reconciliation. Do not deduct it again from the fully net actual price. The original A$10 discount remains in the baseline.
Volume fell by 200 units, or 20%, against the baseline. At the baseline price, that volume movement represents A$18,000 less revenue. Actual revenue was A$74,400, compared with baseline revenue of A$90,000. The A$15,600 difference combines the price uplift and lower volume.
The example holds product and customer mix constant. It excludes taxes, product cost, cost to serve and timing differences. A contribution analysis needs those costs and any changes in them.
Handle credits and rebates by earning period
Use the period in which a rebate or credit was earned, even if cash or a credit note arrives later. Accrue the expected amount using the agreement's rules, then replace the estimate with the actual amount when known.
Keep historical discounts visible by type and period. A prior promotion, standard contract discount and increase-related concession should not share one unexplained discount field. Reconcile the register to invoices, credit notes and rebate records.
Build the register
The blank price increase realisation template includes the core fields. Add a row for each matched customer-product-period combination. The CSV is blank and has no formulas. Calculate the uplift fields in your own spreadsheet.
Include:
- Period, customer or segment, product or service and currency.
- Baseline net unit price, Planned net unit price and Actual net unit price.
- Actual units and Rebates and credits per unit for reconciliation.
- Planned uplift at actual volume, Realised uplift at actual volume and Difference from plan.
- Concession reason, approver role, approval reference and effective date.
- Exemption reason, credit or rebate period and notes.
Check that each price uses the same unit and tax basis. Exclude unmatched lines from the matched comparison and show them separately. Record the reason for missing or estimated data.
Limits
The worked figures are not a forecast or benchmark. The method compares revenue on matched units. Demand, cost and mix require separate analysis.
For a first-year plan that includes exemptions, delays and estimated concessions, see Plan a price increase. For the volume loss that holds contribution constant, see Price-rise breakeven.
Related material
Responsibility and method
Responsible author: Andrew Wilson. Publisher: onestepright.
Substantive update: . The worked register uses invented figures and the stated assumptions.