Explain a margin change without confusing profit and percentage

Build the two line-level bridges

Line A sells 100 units at EUR 10 with EUR 6 unit cost: revenue 1,000, COGS 600, gross profit 400 and margin 40%. Line B sells 100 at EUR 20 with EUR 16 unit cost: revenue 2,000, COGS 1,600, gross profit 400 and margin 20%. All monetary values are EUR; price and cost are EUR per unit.

Combined revenue is 3,000 and COGS 2,200, so gross profit is 800 and gross margin 800 / 3,000 = 26.6667%. Averaging the two line margins to 30% would be wrong because their revenue weights differ.

Change mix while holding unit economics fixed

Move volume to A 50 and B 150. Total units remain 200, but more are sold through the lower-margin, higher-price line. A now contributes revenue 500 and gross profit 200; B revenue 3,000 and gross profit 600. Combined revenue rises to 3,500, COGS to 2,700 and gross profit stays 800.

Gross margin falls to 800 / 3,500 = 22.8571%, a reduction of about 3.8095 percentage points. Neither line’s price, unit cost nor own margin changed. The lower aggregate percentage is a mix effect under this defined comparison.

Download the synthetic example, explicitly import it under Model, select Advanced and open Model → Business Lines. Import creates a separate model with inspectable inputs and sources.

Add price and cost changes in a declared order

After changing mix, increase A’s price from 10 to 11 at volume 50. Revenue and gross profit each rise by 50: totals are revenue 3,550 and gross profit 850, margin 23.9437%. Then raise A’s unit cost from 6 to 7. COGS rises by 50, gross profit returns to 800 and margin becomes 22.5352%.

This order is Base → mix → A price → A cost. If price changed before mix, its standalone gross-profit effect at A volume 100 would be 100 rather than 50. The final combined economics can agree while the attributed intermediate amounts differ.

Download the synthetic example, explicitly import it under Model, select Advanced and open Model → Business Lines. Import creates a separate model with inspectable inputs and sources.

Interpret the bridge within its cost classification

The examples use native revenue price/volume sources and linked per-unit COGS. Fixed opex, taxes and financing are outside gross profit. Reclassifying a cost between COGS and SG&A can change gross margin without changing EBITDA, so the reporting policy must stay consistent.

This is a transparent counterfactual sequence, not an implemented causal-decomposition engine or a unique attribution waterfall. For further testing, select the target deliberately: absolute gross profit, gross margin and EBITDA can rank the same business drivers differently.

Additional reconciled variants

These native files reproduce the discussed variants separately: The intermediate price step before the cost change.

Related decisions and model reference

For adjacent questions: Gross Margin Calculator: Gross Profit, Margin & Markup; COGS Model — Forecast Direct Costs and Gross Profit; Bottom-Up Revenue Forecast: Build Three Business Lines; Price–Volume Revenue Forecast: Worked Model.

For the exact controls and source behavior, use Business Lines and linked detail and Price × Volume and Customers × ARPU.