Skip to content
Log in
← Glossary

price, volume and mix variances

Also called: PVM analysis, price-volume-mix, mix variance, volume variance, price variance

A split of a revenue or margin change into the part caused by different prices, by selling more or fewer units, and by a shift between products with different margins.

Price, volume and mix variances split a change in revenue or margin into three parts: selling more or fewer units (volume), selling a different combination of products with different margins (mix), and charging different prices (price). With several currencies, a fourth part, exchange rates, is usually split out too.

One common way to compute them for contribution, step by step: volume = (actual units − plan units) × the plan's average contribution per unit; mix = actual units valued at each product's planned contribution, minus actual units at the plan's average (what changes only because units moved between products); price = actual units × (actual price − plan price) per product, after fees and at the plan's exchange rates; currency = the effect of actual rates on top. Done in this order, the parts add up exactly to the total change.

The split matters because each part has a different owner and a different fix. Volume is acquisition and retention, mix is which products get promoted, price is discounting and price lists, currency is treasury. A promotion, for example, shows up in all three: lower price on every unit, extra volume, and a shift in mix toward the promoted product.

Example

Klasna planned 5,612 lessons in September at an average contribution of 187.25 UAH and delivered 5,890.

  • Volume: (5,890 − 5,612) × 187.25 = +52,055.50 UAH.
  • Mix: 454 extra lessons went to English in Ukraine, which leaves 168.13 per lesson at plan prices, while maths and programming, at 195.50 to 240.50, lost 196. Valued at each row's plan contribution, that shift costs −11,557.50.
  • Price: English in Ukraine sold at 585 instead of 615: 3,640 × (−30) × 0.975 = −106,470; programming in Ukraine at 705 instead of 720: 400 × (−15) × 0.975 = −5,850. Together −112,320.

The English promo in one line: its extra lessons left at most 454 × 168.125 = 76,328.75, while the lower price cost 106,470 on all English lessons in Ukraine. Net −30,141.25, even if every extra lesson came from the promo.

Common mistakes

  • Valuing volume at each product's own margin. Then volume and mix blur together; use the plan's average for volume.
  • Changing the order between months. The parts only add up when the sequence stays the same.
  • Calling a mix shift a price change. The average price can fall with no price cut at all, just because cheaper products sold more.
  • Leaving currency inside price. Compute price at plan rates and show exchange rates separately.
  • Crediting a promo with all its volume. Some of those customers would have bought anyway; the price cut applies to them too.

Learn it in the course