Price Help

Business Performance Analysis

Help for the Business Performance Analysis Price Module, to test the impact of price changes on revenue and surplus and calculate the optimum price and generate the highest business surplus (profit).

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Help for the Business Performance Analysis Price Module.

The Price module allows you to test the impact of pricing changes on revenue and surplus. Price Analysis projects outcomes for pricing from 50% to 200% of the current price and calculates the optimum price. The optimum price provides the highest surplus (profit).

This Help file outlines the relationships and calculations applied for each item. The ? after an item links directly to the items Help.

Calculation formula are provided for reference and to enable an in-depth understanding of the underlying calculations applied in the forecast. Price analysis can be completed without reference to the formula applied.




Price Analysis applies current Annual Revenue, Total Variable, and Total Fixed values with the Price Data values to project business surplus over a range of prices.

Price Analysis requires Breakeven Analysis be completed.




These are Module specific Controls. They appear as click-able links below the Analysis Menu.


This Control prints the current window.

You can also use the browsers Print and Print Preview functions to set print variables. To do this from your browser tool bar go File, Print or File, Print Preview.




This Control plots the Price Analysis on the Chart module. It shows Annual Revenue and Profit/Surplus by Average Sale Price. The optimum Average Sale Price is where Profit/Surplus is highest.

By stepping through price ranges of 50% to 200% of the current Average Sale Price, calculating the corresponding Profit/Surplus and identifying the point of maximum Profit/Surplus the optimum Average Sale Price is determined.




This is the price that provides the highest surplus (profit) for the business.

It is determined by using Step Values of 0.5 to 2.0 (ie 50% to 200%) of the current Average Sale Price to step through price ranges, calculating the corresponding Profit/Surplus based on the Price change data and identifying the price providing the maximum Profit/Surplus.

The calculations for Profit/Surplus at each price point apply the Sales Price Ratio.

Sales Price Ratio = Sale Price Change % / Number of Sales Change %

Using Example Business Data

Sales Price Ratio = -15 / 20 = -0.75




This is the number of sales at the Optimum Average Sale Price.

Optimum Number of Sales = ( 1 + (Step Value - 1) * Sales Price Ratio ) * Number of Sales

Using Example Business Data with an Optimum Average Sale Price of 140 which is a Step Value of 1.4 (ie a 140% change on the Average Sale Price of 100).

Optimum Number of Sales = ( 1 + ((1.4 - 1) * -0.75)) * 10 000 = 0.7 * 10 000 = 7000




This is the annual revenue at the Optimum Average Sale Price.

Optimum Annual Revenue = Optimum Number of Sales * Optimum Average Sale Price

Using Example Business Data:

Optimum Annual Revenue = 7000 * 140 = 980 000




This is the total variable expenses at the Optimum Average Sale Price.

Optimum Total Variable = Optimum Number of Sales * ( current Total Variable / current Number of Sales )

Using Example Business Data:

Optimum Total Variable = 7000 * ( 450 000 / 10 000 ) = 315 000




This is the total fixed expenses at the Optimum Average Sale Price.

Optimum Total Fixed = current Total Fixed

Using Example Business Data:

Optimum Total Fixed = 170 000




This is the total surplus at the Optimum Average Sale Price.

Optimum Profit/Surplus = Optimum Annual Revenue - ( Optimum Total Variable + Optimum Total Fixed )

Using Example Business Data:

Optimum Total Fixed = 980 000 - ( 315 000 + 170 000 ) = 495 000



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