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This week's featured article
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Price Indexes are useful to compare prices across products, customers and over time, to assess discount levels and to which degree discount policies are enforced.
There are two important price indexes related to a sale transaction or a contract:
- The list price index: the ratio between the pocket revenue generated (after all discounts and rebates) and the “list revenue” that would have been generated if all products and services had been sold at their list price (undiscounted) as defined in the applicable price policy.
- The target price index: is the ratio between the pocket revenue generated (after all discounts and rebates) and the “target revenue” that would have been generated if all products and services had been sold at their target price as defined in the applicable discount policy. ( more...)
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This week's featured formula
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This index reflects that price is 10% below the discount policy:
\(
\operatorname{Target Price Index (P1)} =
\frac{Pocket Price (P1)}{Target Price (P1)} =
\frac{9}{10} =
{0.90}
\)
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