Price volume mix

Splitting a change in revenue or margin into what came from price, what came from volume and what came from the blend of products sold.

DefinitionSplitting a change in revenue or margin into what came from price, what came from volume and what came from the blend of products sold.

Price volume mix, or PVM, analysis explains why revenue or margin changed between two periods, or between budget and actual, by separating three causes: charging more or less per unit, selling more or fewer units, and selling a different blend of products. The three parts add up to the total change and are usually shown as a bridge.

How it is computed

Per product: volume effect = (units this period − units last period) × last period's price; price effect = (price this period − price last period) × units this period. With several products, the mix effect separates the shift in shares from the total volume change. The effects must sum to the change.

Example

One product sold 1,000 units at $50, $50,000, last year and 1,100 units at $52, $57,200, this year: a $7,200 increase. Volume effect: 100 × $50 = $5,000. Price effect: $2 × 1,100 = $2,200. They sum to $7,200; with one product there is no mix effect.

Where it goes wrong

Mixing the base periods, so a residual appears that nobody can name. The full guide is price volume mix analysis.

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