Price
Productivity
Calculator
Example

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Sourcing Decision Support, Inc. Price Productivity Calculator

Can your supplier at least match industry standards when adjusting parameters that give customers more value yet maintain  supplier operating income?

The price productivity calculator is designed to calculate how great a reduction in fixed costs, variable costs or increases in unit volume is needed to allow a supplier to maintain their operating income percentage while reducing their price. Each 1% improvement in:

Price gives a 11.1% income improvement; Variable Cost gives a 7.8% income improvement; Volume gives a 3.30% income improvement; Fixed Costs gives a 2.30% income improvement

The ratios used for these calculations were published in the Harvard Business Review article "Managing Price Gaining Profit", Sept-Oct 1992.