Worksheet: Plot net price against volume for one category

A small customer that pays less per unit than a large one usually got there through one rep and one deal. This sheet plots net price against volume for one category, names the outliers and dates each fix. It builds the Competent step of the check:

Net price by customer is plotted against volume and value each year, and the outliers are known and being fixed.

Step 1. The data

One row per customer for the same category and the same twelve months. Use the net-net price after every term.

Customer	Channel	Annual volume (units)	Net-net price per unit	Discount from list (%)	Cost to serve per unit	Net margin per unit
e.g. Customer 12	Wholesale	40,000	$2.05	28%	$0.25	$0.60

Step 2. Plot it and find the outliers

Put volume on the bottom axis on a log scale and net price up the side. Draw the line most customers sit near. An outlier sits well below the line for its size.

Outlier	Annual volume	Net price	Price expected at this volume	Gap per unit	Gap per year ($)	How it happened (rep, deal, history, distributor)
e.g. Customer 12	40,000	$2.05	$2.30	$0.25	$10,000	Price held since a launch deal

Check the value side too. A customer who pays less but costs much less to serve may not be an outlier.

Step 3. Date each fix

Customer	Fix (move terms at renewal, phase over two rounds, keep with a written reason)	Value per year ($)	Owner	Date

The rule to work toward: no customer pays less than a larger customer that costs less to serve.

Done when: net price by customer is plotted against volume and value each year, and every outlier has a named fix and a date.

Adapted from our own SKU pricing review (PJP, 2017).