Hi,

In general, I would not recommend to use average price. You should always understand the different revenue streams (if more than 1) then dissect the problem from there.

Hi Raf,

Victor who? Just kidding.

You're asking an interesting question. I agree, technically, that you need to separate revenue streams in order to be 100% MECE. However, the idea of creating a MECE structure is to enable you to develop and test hypotheses. If you try and separate revenue streams, your structure will become unweildly and not useful. So the practice has developed to give a little on MECE-ness and prioritize practicality.

In summary, address this problem by changing volumes or by changing prices. And go through different products where you can do this.

Does that help?

Allen

Hi,

Good question. How I like to think about is that the bucket "Price" or "Price management" in a revenue growth case means the prices of different products. What I mean is that this is not the average price, but prices for the different segments. So this framework would be mece if you are able to communicate that this is branch is really about increasing the different prices and not the average price.

Another way to tackle it is to add the third bucket "Mix", which basically means changing the product mix. However, I do not think this is necessary as that is covered in the "Volume" part if you, again, effectively communicate that you mean increasing volume of different products (or the relevant segmentation) and not just the total volume.

Hi there,

You need to remember here that in casing, we often need to look at trends and THEN segment out.

So, the overall trend of Revenues is down. Which leads us to segment out (by product, geography, etc.). At which point we then look again at overall trends across each product split by price and volume.

Hi,

When I approach a profitability case, and more specifically the revenue piece, I would recommend the following:

(1) think first what changes revenue (excluding factors around you: economy, competitors, customers, etc... simply think of revenue levers/drivers)

a. volume change

b. price change

c. both

(2) in regards to your concern about being MECE, this is MECE as it is, but how you break it further is what matters. The above is the overall structure. Now, what can be done is to break this further into a second layer while being MECE. The second layer could have overlaps, as is the example you mentioned when it comes to product mix.

a. volume change

a1. increase old volume

a2. add new volume

a3. change volume mix

b. price change

b1. change existing price

b2. introduce new product (and obviously its price)

b3. change product mix (which obviously leads to differently priced products to represent more of the revenue)

c. Both - entails combinations of the aforementioned.

(3) the way to go about representing the changes to revenue could be done in a matrix where you have price and volume against the ways of change. But ultimately, they all fall under both.

(4) the creative ways of achieving those points can be saved for later

- increase the usage of the same product

- make non-customers customers (blue ocean strategy)

- acquire

-find new purposes for your product

-etc...

DM me for more about this subject.

Rakan