Price–Volume Revenue Forecast

Build a forward price-volume model

The task is to construct future revenue for Business Line A. Price × volume keeps the selling price per unit separate from the number of units sold. This worked method sits within the broader Revenue Model; it does not allocate historical revenue variances.

Four explicit forecast periods

Start in 2026 with EUR 100 per unit and 4,000 units: revenue is EUR 400,000. In 2027 increase volume to 4,400 while price stays at EUR 100. In 2028 hold volume at 4,400 and increase price to EUR 110. In 2029 both change: EUR 115 and 4,800 units. Each column is a separate annual forecast assumption.

Direct cost is EUR 50 per unit throughout. Its volume input links to Business Line A’s volume output, so quantity changes update both revenue and COGS. All other expenses, taxes, investment, opening balances and working-capital inputs are zero to isolate this construction exercise.

Reconcile the line and linked costs

The volume-only step raises revenue from 400 to 440 and COGS from 200 to 220, leaving gross profit of 220. In the price-only step, revenue reaches 484 while COGS stays at 220; gross profit becomes 264. When both assumptions rise, revenue reaches 552, COGS 240 and gross profit 312. Amounts here are EUR thousands.

The Gross Margin rises from 50% to 54.55% and then 56.52% because selling price increases while cost per unit remains fixed. This is conditional on the entered cost assumption, not evidence that real-world price increases are cost-free. The COGS Model develops direct costs further.

Why the assumptions stay separate

A single revenue growth rate would conceal whether the company needs more units, higher prices or both. Here the price-only year improves gross profit without increasing volume-linked delivery cost. The volume-only year requires more delivery spending. Keeping the drivers distinct makes those consequences inspectable.

This example assumes a homogeneous product and no price-demand response, discounts, product mix or capacity constraint. It constructs a forecast; it does not perform price-volume variance analysis. For several lines using different methods, continue to Bottom-Up Revenue Forecast.

Reproduce the four-year forecast

1. Create a Blank Example Company model starting in 2026, with zero actual years, four forecast years, December 31 year-end, EUR and thousands. Switch to Advanced.

2. Open Model beside Revenue, add Business Line A and choose Price × Volume in every forecast column. Enter prices 100, 100, 110, 115 and volumes 4,000, 4,400, 4,400, 4,800. Prices are EUR per unit; they are not entered in thousands.

3. Open Model beside COGS, add Business Line A direct costs and choose Cost × Volume. Enter cost per unit 50. Change the volume component source to Linked value and select Business Line A · Volume in each period. Keep the cost volume linked rather than typing a second quantity series.

4. Compare the outputs above and check revenue less positive direct costs equals gross profit. To inspect the exact state, download the synthetic price-volume file and select it under Manage models → Import. This is an optional manual step after opening the model.

Extend only the economics you actually model

The current Price × Volume method supplies this line and its explicit volume reference. It does not infer demand or optimize pricing. To add payroll, overhead and other statement consequences, use the Financial Operating Model. The main CTA opens the financial model without preloading any example.