Reference
One price increase, from proposal to invoice check
A pricing decision needs a consistent scope and period from proposal through invoice checking. This invented example follows a 1% increase across an A$50 million business. Every amount below measures revenue, with profit assessed separately.
Set the scope before comparing options
The invented business sells industrial supplies through trade accounts. Annual baseline revenue is A$50 million, excluding GST. The planning year runs from 1 July 2027 to 30 June 2028. Volume and mix stay constant in both options.
For clarity, every unit starts at a fully net A$100. The business sells 500,000 units evenly across the year. A 1% increase would add A$500,000 before exemptions, delays or further discounts.
Compare the same year and revenue base
Option A exempts 20% of revenue and starts on 1 October. Further discounts remove 10.1% of the increase that remains after timing. Option B exempts 10%, starts on 1 September and gives back 5% of that remaining increase.
| Revenue bridge | Option A | Option B | B minus A |
|---|---|---|---|
| Increase before adjustments | A$500,000 | A$500,000 | A$0 |
| Less exemptions | A$100,000 | A$50,000 | −A$50,000 |
| Less delay | A$100,000 | A$75,000 | −A$25,000 |
| Less discounts and rebates | A$30,300 | A$18,750 | −A$11,550 |
| Extra revenue retained | A$269,700 | A$356,250 | A$86,550 |
The difference reconciles as A$50,000 + A$25,000 + A$11,550 = A$86,550. The bridge follows the calculation order. Changed assumptions interact, so these amounts do not isolate independent causes.
Option B retains more revenue under its assumptions. The calculation cannot show whether customers will accept it. The team must assess contract dates, notice requirements and possible volume losses before choosing.
Check the discount without changing its denominator
Under A, eligible accounts represent A$40 million in annual baseline revenue. The increase applies for nine months, covering A$30 million of baseline sales. Proposed revenue for those months is A$30.3 million.
A further 0.1% discount off the whole proposed price costs A$30,300. The business retains A$269,700 above baseline. Enter A$40 million, 1%, 0.1% and nine months into Discount to reproduce that calculation.
The 0.1% whole-price discount equals 10.1% of the A$300,000 increase. Enter 10.1% in the decision sheet’s give-back field. Entering 0.1% there would produce a different result. Keep the denominator beside every percentage.
The main decision-sheet sample uses a rounded 10% give-back assumption. Its A$270,000 result is a separate illustration. This connected example uses 10.1% to match the whole-price discount exactly.
Record the decision for the meeting
The example team provisionally selects A because the earlier date remains unverified. The sales director must confirm September notice and contract coverage before reconsidering B. That choice illustrates an evidence gap, without recommending either option.
| Meeting field | Invented entry |
|---|---|
| Scope and year | Whole business, A$50 million; 1 July 2027 to 30 June 2028 |
| Proposal | 1% increase; 20% exempt; effective 1 October 2027 |
| Alternative | B retains A$86,550 more; September contract coverage requires checking |
| Discount | 0.1% off proposed eligible prices for nine months; no automatic renewal |
| Approval evidence | Customer terms and notice checks required before release |
| Owner and review | Commercial director; 15 June 2027 |
The meeting paper records the assumptions and unresolved checks. Its calculation does not approve the increase. A real team would add evidence, responsible people and decision dates.
Follow A through the invoices
Of 500,000 annual units, 100,000 remain exempt. Another 100,000 eligible units sell before October at baseline prices. The remaining 300,000 units receive the increase. Their baseline value is A$30 million.
| Matched October-to-June units | Per unit | Total at 300,000 units |
|---|---|---|
| Baseline fully net price | A$100.000 | A$30,000,000 |
| Proposed price before the further discount | A$101.000 | A$30,300,000 |
| Actual invoice price | A$100.950 | A$30,285,000 |
| Less allocated credits | A$0.030 | A$9,000 |
| Less allocated rebates | A$0.021 | A$6,300 |
| Actual fully net price | A$100.899 | A$30,269,700 |
The invoice reduction costs A$15,000. Credits and rebates cost another A$15,300. Together they reconcile the A$30,300 further discount. Deduct each adjustment once.
At actual volume, proposed uplift before that discount is A$300,000. Fully net uplift is A$269,700, or 89.9% of that proposed uplift. Against the original whole-business A$500,000 announcement, the retained share is 53.94%.
The approved target after the further discount is A$100.899 per unit. In this invented check, actual net prices match that target exactly. The discount was planned, so it should not be called an unapproved shortfall.
Adding exempt and pre-October sales gives annual revenue of A$50,269,700. That reconciles the decision sheet. A real check must also reconcile source invoices and ledger totals. Differences in volume, mix, costs or collections require separate explanations.
Use the tools with your own assumptions
No inputs transfer between tools. Keep the scope, units and dates beside the amounts. The example assumes uniform prices and an even sales run rate. Real customer-product lines will differ.
Responsibility and method
Responsible author: Andrew Wilson. Publisher: onestepright.
Substantive update: . All figures and decisions are invented. The example keeps scope, period and percentage bases explicit.