Price Realization

Price realisation is a process by which you evaluate your sales performance between two periods for a consistent scope of products (namely, you focus exclusively on products that were sold on both periods of time). This approach is often used to measure the selling price variation from one period to another (following a price policy change, for instance).

This Tableau Accelerator allows you to:

• Measure your ability to achieve the prices you set for your products or services in the market
• Focus your efforts on top offenders
• Identify outliers
• Audit prices evolution
• Deep-dive at lowest level of detail

Why price realisation is important

Analysing price realisation is crucial for businesses and organisations for several reasons. Price realisation refers to the ability of a company to achieve the prices it sets for its products or services in the market. It is an essential metric that provides valuable insights into the effectiveness of a company’s pricing strategy and its overall financial performance. Here are some reasons why analysing price realisation is important:

• Profitability Assessment: Price realisation directly impacts a company’s revenue and profitability. By analysing how well the company is able to realise the prices it sets, management can assess whether the pricing strategy is effective in maximising revenue and generating profits.
• Competitive Positioning: Understanding price realisation helps companies gauge their competitive positioning in the market. If a company consistently achieves higher prices than its competitors’, it indicates that customers perceive the product or service as offering superior value.
• Pricing Strategy Evaluation: Price realisation analysis helps evaluate the success of a company’s pricing strategy. It allows businesses to assess whether the pricing structure, discounts and promotions align with customers’ willingness to pay and market conditions.
• Demand and Customer Behaviour: Studying price realisation can provide insights into customer behaviour and demand elasticity. A company can identify how price changes affect customer demand and adjust its pricing approach accordingly.
• Product and Market Segmentation: Analysing price realisation across different products and market segments can highlight which products or customer groups are more price-sensitive and which ones are more willing to pay a premium. This information helps in refining product and market strategies.
• Sales Performance Evaluation: Price realisation analysis can also provide feedback on the performance of sales teams. If a company consistently fails to achieve its target prices, it might indicate the need for better sales tactics or negotiation skills.
• Optimising Pricing Tactics: Companies can use price realisation data to optimise pricing tactics, such as bundling, tiered pricing or volume discounts, to maximise overall revenue and profitability.
• Identifying Price Leakage: Price realisation analysis can help uncover instances of price leakage, where customers receive products or services at lower prices than intended. This could be due to unauthorised discounts, unmonitored channels or other pricing inconsistencies that can impact a company’s bottom line.
• Investor and Stakeholder Confidence: For publicly traded companies, price realisation metrics can influence investor and stakeholder confidence. Demonstrating a strong ability to achieve set prices can positively impact a company’s valuation and reputation.

Overall, analysing price realisation provides actionable insights that can guide businesses in refining their pricing strategies, improving profitability and maintaining a competitive edge in the market.

Answer key business questions

• What is the price realisation for our products?
• In which region the price realisation is the largest/lowest?
• How price realisation is impacting revenue?

Monitor and improve KPIs

(The Price Realisation calculation is currently done at “Product & Customer” level of detail. This level of detail can be changed in the pick-list at the top of each page.) Two periods are defined in the user-interface: Period 1 and Period 2. For each period, we only focus on combinations of “Product & Customer” which were sold in both periods. This scope defined by these combinations defines the concept of “Matched Revenues: Period 1” or “Matched Revenues: Period 2”, respectively the amount of revenues generated by these combinations over Period 1 and Period 2. The same principle applies for “Matched Quantity” and “Matched Average Selling Price”.

Sales

• Total Revenues: Total Sales amount (expressed in currency)
• Total Quantity: Number of units sold (expressed in units or equivalent units)
• Average Selling Price: Average price at which a particular Product is sold (expressed in currency)

Price Realisation

• Price Realisation: Impact of price variation (between Period 1 Average Selling Price and Period 2 Average Selling Price) on Period 2 revenues, for all “Product & Customer” (level of detail to be chosen in the pick-list at the top of the page) that were sold both during Period 1 and Period 2 (expressed in currency)
• Price Realisation %: Impact in % of price variation (between Period 1 Average Selling Price and Period 2 Average Selling Price) on Period 2 revenues, for all “Product & Customer” (level of detail to be chosen in the pick-list at the top of the page) that were sold both during Period 1 and Period 2 (expressed in currency)

Matched Revenues

• Matched Revenues (Period 2): Revenues generated in Period 2, for all “Product & Customer” (level of detail to be chosen in the pick-list at the top of the page) that were sold both during Period 1 and Period 2 (expressed in currency)
• Matched Revenues (Period 2 vs Period 1): Difference in % of Revenues generated between Period 2 and Period 1, for all “Product & Customer” (level of detail to be chosen in the pick-list at the top of the page) that were sold both during Period 1 and Period 2 (expressed in currency)

Matched Quantity

• Matched Quantity (Period 2): Total quantity sold in Period 2, for all “Product & Customer” (level of detail to be chosen in the pick-list at the top of the page) that were sold both during Period 1 and Period 2 (expressed in units)
• Matched Quantity (Period 2 vs Period 1): Difference in % of Quantity sold between Period 2 and Period 1, for all “Product & Customer” (level of detail to be chosen in the pick-list at the top of the page) that were sold both during Period 1 and Period 2 (expressed in units)

Matched Avg Price

• Matched Avg Price (Period 2): Average Selling Price over Period 2, for all “Product & Customer” (level of detail to be chosen in the pick-list at the top of the page) that were sold both during Period 1 and Period 2 (expressed in currency)
• Matched Avg Price (Period 2 vs Period 1): Difference in % of Average Selling Price between Period 2 and Period 1, for all “Product & Customer” (level of detail to be chosen in the pick-list at the top of the page) that were sold both during Period 1 and Period 2 (expressed in currency)

Required attributes

• Date (date): Sales date
• Customer (string): Customer name
• Product (string): The item which is actually sold: product, service…
• Sales Group (string): The way you regroup sales: business line, product category…
• Sales Agent (string): Sales agent name
• Country (string): Country where the sales occurred
• City (string): City where the sales occurred
• Sales Amount (numeric): Sales amount
• Sales Quantity (numeric): Number of units sold