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.

Sourcing Decision Support, Inc. Price Productivity Macro

Price productivity macro allows the user to see the impact of various changes to price, fixed and variable costs on operating income (assumes unit volume is constant).

Income statement ratios for fixed costs, variable costs and profit in percentage format maybe found in the Quarterly Financial Report for U.S. Manufacturing Corporations (http://www.census.gov/ftp/pub/mp/mfg/msmfg13a.html).

For additional information on this subject see: "Managing Price, Gaining Profit", Harvard Business Review, Sep-Oct 1992.

Sourcing Decision Support, Inc. Price Productivity Micro

Price Productivity Micro allows the user to see the impact of changes in price, direct material, direct labor, variable overhead, and fixed costs on operating income.

For additional information on this subject see: Managing Price Gaining Profit, Harvard Business Review, Sept-Oct 1992