Discounts, Price Increases, Price-Volume-Mix and What One Point of Price Is Actually Worth
Julian R. Sterling
These are the companion files of Pricing Strategy by Julian R. Sterling.The book on Amazon →
The four Excel workbooks that go with the book, corrected where they were wrong. Every figure the book prints is
reproduced in them by a live formula rather than a typed constant, and each ends with a Checks sheet setting the
printed figure beside the computed one: 76,282 formulas and 1,182 controls in all, every one green. Around them: the
calculator for your own book with the inputs emptied and a new workbook of single decisions, twelve working documents to
print, forty questions that mark themselves, and three cases the book names and never takes to a number.
Free to download. No sign-up, no email address, nothing to fill in.
Seven workbooks, the three cases, the printable documents and the read-me. Each group below can also be
downloaded on its own. Last revised 24 September 2026.
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These carry the book’s own figures, so that every number it prints can be traced to a live
formula. Two of the figures were wrong and are corrected below, with the first edition’s figure kept beside the new one.
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Chapters 1, 4, 5 and 6
The waterfall
Two kinds of value are typed into this file and no others. The Assumptions sheet carries the three list prices, the three variable costs, the two on-invoice rates, the seven off-invoice rates and the commission rate. The Accounts sheet carries what a customer file would carry: for each of the 180 accounts, its units by family, its average order, its orders a year, its headline negotiated discount, its allowance rates and whether it takes the cash discount. A workbook that claimed to derive a customer file from nothing would be lying to you.
Everything after that is a formula. The 458-row line sheet is built from the two, every company total is summed from those lines rather than typed, and the 56,124,433.13 of pocket revenue is the result of 458 additions. On top sit the DIS-024 cascade per unit and for the year, from a list price of 148.00 through an invoice price of 129.03 to a pocket price of 112.51; the company cascade from 69,880,000 at list down to operating profit; the nine leakages ranked by size; the four segments; the pocket price band by segment and family with the minimum, the quartiles, the maximum and the correlation with volume; and the direct industrial accounts by salesperson with the variance split that Chapter 6 turns on.
Change one negotiated discount and the band moves, the segment moves, the company total moves, and the check on 56,124,433.13 fails. That is the intended behaviour.
This is the one to open with a real decision in front of you. It computes the four levers from inputs: a point of price worth 549,193.63 against a point of volume worth 151,393.63, which is where the ratio of 3.6 points of volume to one of price comes from. It computes the break-even volume of a cut as d divided by the quantity m less d, and of a rise as d divided by the quantity m plus d, live, with the table at Ravensworth’s margin of 27.0 per cent, the table across margins, and the table by family. A 5 per cent cut needs 22.8 per cent more volume; a 5 per cent rise can lose 15.6 per cent.
It carries the rebate cliff of DIR-075 at 9,360 units, including both thresholds: the point at which the last units become free to the customer, and the point at which they stop covering their own variable cost. Those two are not pasted. A Solve sheet finds them by bisection, twenty-four passes unrolled one to a column, and reports CONVERGED when the interval closes. There is no circular reference and no iterative calculation anywhere in these files.
Revised: the last units before the tier carry every off-invoice deduction the account takes, not only the
rebate. DIR-075 also takes a freight allowance and returns, 2.1 per cent of invoice, so the 640 units leave
4,967.53, not 6,087.91, and the last 458 units before the tier, not 430, fail to cover their
variable cost, commission and those deductions.
It also prices payment terms, with the annualized cost of an early-payment discount as a formula rather than a constant — 2/10 net 30 at 37.2 per cent a year — and it builds the authority matrix of Chapter 17 with the break-even volume beside each band, so the authority is derived from the margin rather than asserted.
The one to take to a review meeting. It carries the price increase of Chapter 10 with the rate obtained and the months at the new price as inputs by segment, returning the realized rate and the net position against cost inflation: 5.0 per cent announced, 2.3 realized, 1,291,961.25 against a cost increase of 1,630,980.00 and a net of -339,018.75 before commission. Revised: the commission the increase itself creates is charged on each
segment’s own invoice, 27,423.12 rather than 27,740.22, so contribution fell 366,441.87, not 366,758.97.
It carries the match-or-hold comparison of Chapter 11 with the elasticity as an input cell and the full elasticity table beneath it, so a reader who believes the demand response is stronger than the one this book declares can say so in a cell and read the consequence rather than argue about it. It carries the five-effect price-volume-mix bridge of Chapter 12 — volume 774,292.16, mix -329,158.64, price -1,089,991.39, cost -825,193.32, commission 21,533.04 — with the check line that must show zero.
And it carries the three-year paths of Chapter 13, at the announced rate and at the rate actually realized, and the deal table of Chapter 14 with the win-probability parameters as inputs, showing the company’s optimum discount and the salesperson’s optimum under both commission plans at the same time.
This one is not a reproduction. It is the calculator the book argues for, built for a book of business that is not Ravensworth’s. Enter your list prices, your own nine leakage rates, your variable cost, your commission rate, your fixed costs and your two cost-to-serve rates, and it returns your pocket margin, what one point of price is worth to you in points of volume, and your break-even volume for a cut and for a rise.
Paste a list of your accounts with their units and their pocket prices and it returns your band, your 25th-percentile floor by segment, the money a lift to that floor would produce at unchanged volume, and the volume those accounts could lose before the gain is gone. It also solves for the multiple at which your own segment ranking inverts, by bisection across twenty-eight unrolled passes rather than by scanning a table of round multiples.
It expects three product families and four segments, because that is the shape of the worked example it arrives with; a business with nine families and six channels has rows to add on the input sheet and on the floor grid, and the read-me says where. It ships filled in with the Ravensworth figures so the Checks sheet can prove it agrees with the book before you trust it with anything of your own. Clear the example and the checks fail. That is how you know the file is yours now rather than the book’s.
The calculator the book argues for, with every input emptied, and a new workbook for the decisions that arrive one at a time. The checks sheets count what is still missing and test what holds for any inputs.
Chapters 2, 3, 7 to 11, 14 to 17
Your book, and the decision on your desk
Price_Your_Own_Book_Blank is the book’s own calculator with your products, your nine leakage rates, your costs, your cost-to-serve rates, your lines and your accounts emptied; the margins, multiples and percentiles stay. Discount_Decisions_Blank is new: what a point of price is worth and what a discount needs, the three numbers at the top of a discount request, the rebate cliff in front of one account (with the correction), what a payment term costs, match or hold, and a price increase segment by segment.
The other three workbooks reproduce Ravensworth’s customer file line by line, so they have no blank twin. The book’s inputs are listed in a text file inside the archive: type them back in and its figures come back, 3.63 points of volume for a point of price, 460,444.62 for the floor, and the two corrected figures, 4,967.53 and 27,423.12.
Blank_Model_Set.zip · two XLSX files and the book’s inputs
The documents the chapters describe
Twelve pages to print and use. A4, with margins wide enough for US Letter.
Chapters 1 to 17 · Appendix B
Twelve working documents
List to pocket on one page, sorted by what each deduction is rather than who spends it. One account-family line from list to pocket. The four levers and the break-even card. The band and what explains it, with the chance level beside the salesperson test. The rebate tier review with both windows. The payment terms register. Account profit and the cost to serve. The price increase plan and its realization. Match or hold. The price-volume-mix bridge with its check line. The discount request with its three numbers. And the thirty questions of Appendix B on one page.
Each page carries Ravensworth’s figure as a calibration point, never as a benchmark.
A workbook that marks itself. Answer in the yellow cells; the marking fills in as you go.
All parts of the book
Forty questions on the book
Seven on list to pocket and the four levers, seven on the band, the salesperson and the rebate, six on terms and account profit, seven on the increase, the match and the bridge, six from the skipped year to the authority matrix, and seven on the three cases below. Numbers are marked to a tolerance, multiple choice to the letter, and the score sheet counts your errors part by part: that is your revision list.
Nothing is hidden. The marking sheet holds every answer, every tolerance, and the reason for each answer.
New material, not a restatement. Three situations the chapters name and never take to a number. Each case is one workbook: the note is the first sheet, the model is the rest, and a checks sheet closes it. Type your own figures in and every finding recomputes.
Chapter 10 · Case one
The distributors buy before the new price
The omission Chapter 10 names and leaves unpriced. At a carrying cost of 15 per cent a year (ADDED), a distributor buys 8.67 weeks ahead of the 1 March effective date. That takes 59,840.25 out of the realized increase, from 2.30 to 2.20 per cent of pocket revenue; half of it reaches the distributor and half is burned in carrying cost. The first quarter at the new price then shows distributor shipments down 67 per cent with no customer lost.
Chapter 7 · Case two
The incremental rate that costs what the retroactive one costs
Chapter 7 declines to compute it; at this year’s volumes it can be. A common multiple of 1.686 on the three rates, 3.37, 5.90 and 8.43 per cent paid incrementally, costs exactly the 1,604,149.89 the retroactive tier costs and removes the cliff: DIR-075’s last 640 units then leave 16,739.97 instead of 4,967.53. Nobody pays in total; 43 accounts receive less and 21 more, 163,575 moving between them.
Chapter 9 · Case three
Receivables and freight in the account profit
The two omissions Chapter 9 names do not run the same way. Financing the receivables costs 414,348 a year, 255,914 of it on the OEM book at 60 days, and moves the crossing from 1.17 to 1.24 times the declared rates: the finding gets stronger. Freight is not in the book, so the case prints the threshold instead of a guess: at 110 an order the small direct accounts fall to the OEM return.
an assumption that decides the answer rather than merely feeding it
Black text
a formula — do not overtype these
Green text
a link to another sheet
Checks sheet
the printed figure beside the computed one, the difference, a PASS or a FAIL, and the tolerance being applied; in the blank set and the cases, what is still missing and what holds for any inputs, ending ALL OK
Amber fill
an input in the blank set and the cases
ADDED
a value the book does not give, used in a case and marked wherever it appears
Why the checks matter more than the models
A workbook that agrees with a book proves nothing on its own — the author wrote both. What
the Checks sheets do is different: they force the model to reproduce a number that was printed
before the model existed, from a formula rather than from the number itself. And they are built
to be breakable. Move one input and some of them go red: 120 of 468 checked figures in the
waterfall move when DIS-024’s negotiated discount is taken from 11.0 to 17.5 per cent. A
workbook where nothing moved would be a workbook of pasted numbers.
Rounding to the cent is applied at exactly the points the book applies it, which is after each
deduction rather than at the end, because a workbook that composes in full precision produces
figures that are defensible, different, and wrong against the printed page.
Nineteen check rows carry a variance below half a cent. In every case the published column holds
a rounded figure while the live cell carries the unrounded value behind it, and nine of the
nineteen are published to three or four decimals rather than two. Each of the nineteen is shown
side by side with its variance rather than hidden, and none of them is a disagreement about the
answer.
Go beyond the companion files
Pricing Strategy develops the complete framework behind these models, with the assumptions, trade-offs and worked examples tied together.
The workbooks open in Microsoft Excel, LibreOffice Calc, Google Sheets and Numbers; the PDF
prints on A4 or US Letter. They use no
macros and no add-ins, so nothing needs to be enabled or trusted. There is no circular reference
anywhere in them: the two places where the arithmetic loops back on itself are unrolled one pass
to a column on a Solve sheet, with a cell that reads CONVERGED. If your spreadsheet asks to
update links on opening, decline — there are none.
What changed, and when
24 Sep 2026
The four workbooks corrected and checked again: 1,182 checks, all passing. The commission a price increase creates is charged on each segment’s own invoice: 27,423.12, not 27,740.22, and contribution fell 366,441.87, not 366,758.97. The last units before a rebate tier carry the account’s other off-invoice deductions: DIR-075’s 640 units leave 4,967.53, not 6,087.91, and the below-cost window is 458 units, not 430. Added: a blank set, twelve working documents, forty questions that mark themselves, and three cases.
How do you calculate pocket price from list price?List less on-invoice discounts, then off-invoice deductions as a share of invoice: 148.00 list, 129.03 invoice, 112.51 pocket, 24.0 points below list.
How much must prices rise to offset cost inflation?Cost increase over price holds profit in money; over cost, it holds the margin. Costs up 5.10 on a 100.00 price need 5.10 per cent, or 6.07 to keep 16.0 per cent.
How do you measure discount leakage by salesperson?Against the discount their accounts should get: the rep at 11.34% is on policy, the one at 10.25% is 3.06 points over, 165,500 a year, and it is not chance.
How much discount should a product bundle give?Just enough to convert single-product buyers. Here a 12.0 per cent bundle discount adds 47,000 of contribution; at 25 per cent it earns less than no bundle.
Closing the DealTwo defensible bridges 20.70 million apart, a peg worth 7.00 million, and the six choices that remove 6.60 of a 12.00 earn-out.
CMBS and CRE CLOsWhere the loss actually lands, from appraisal reduction to realised severity, and what the B-piece is really being paid for.
How to Read a Commercial LeaseThe three refinements chapter 19 names and never performs, and the renewal rate below which the mark-to-market is worth nothing.
How to Read a Credit AgreementWhere the default actually comes from, the cure that costs 5.5 times the other, and the capacity nobody adds up.
How to Read a Real Estate Loan AgreementThe cure ratio in closed form, the four-point window in which the cheap cure works, and the cure sized to the wrong threshold.
Office Real EstateA six per cent yield that returns 3.2 per cent once the re-letting cycle is paid for, and the headline-to-net-effective rent arithmetic.
Private Equity Real EstateBoth worked waterfalls to the dollar, the two capital stacks, and the arithmetic of the promote made changeable.
Private Markets PerformanceThirty-one of the thirty-three figures chapter 19 publishes reproduce exactly — and the two that do not are named rather than quietly adopted.
Raising a Real Estate FundThe chapter 17 funnel run on a calendar — when the first close actually lands, and why more travel does not help.
Real Estate FinanceFour people look at one building and reach four numbers; the lender is whole only above 105,109,489, twelve per cent below today’s value rather than forty.
Real Estate Financial ModelingProperty, development and fund models built line by line, and the modelling test worked end to end.
Real Estate Fund ManagementThe waterfall of 6.11, the build-to-core of 8.7 and the proceeds gap, reproduced as live formulas rather than asserted.
REIT Analysis and ValuationFFO of 532.0, AFFO of 381.0, net asset value and dividend safety — every figure a formula you can change.
Retail Real EstateThe occupancy cost of every unit in a centre, the sixteen per cent of the rent roll no tenant can sustain, and the right-size-convert-or-hold decision priced.
Sale and LeasebackA €179.5 million transaction end to end, with rent cover measured on the entity that actually signs the lease.
Self-Storage Real EstateThe cohort engine behind a 590-unit store, and the rate increase on existing customers priced against the move-outs it causes.
The Fund Finance ProfessionalChapter 8 builds the reported-to-eligible NAV bridge; chapter 9 computes every ratio without it. Two points at every state — and what a subscription line does to the IRR.
The Growth Equity InvestorWhat a pro rata cheque really costs, and the band where defending your ownership loses money.
The Private Credit InvestorThe two coverage ratios are not measured on the same thing: the erosion is 47.7 per cent, not the 28.7 the headline implies.
The Private Equity Fund Controller PlaybookThe book defines IRR, DPI, RVPI and TVPI, tells you to update them at the exit, and prints not one value. Computed: a 1.833× deal inside a fund at 0.892 TVPI.
The Venture Capital AssociateWhat defending a position costs, and how many companies a reserve pool actually defends.
Financial Risk ManagementA fund inside every limit that cannot meet a redemption — and the number that decides it is the one with no currency attached.
Business ValuationThree advisers land 26.8 per cent apart on one company, and the whole gap turns out to be 1.96 points of perpetual growth.
Quantitative FinanceThree models agree to a quarter of one per cent about a number that one unobservable input moves a hundred and three times as much.
Asset ManagementFour people quote four returns for one mandate, all correct and 2.7017 points apart — forty-eight times the manager’s net skill.
Alternative InvestmentsA manager reports 13.29 per cent and the endowment earns 6.26 — both correct, and only a third of the advertised advantage arrives.
Venture CapitalOne company out of twenty-eight returns 56.7 per cent of the fund, and half the capital goes in after the decision — at half the return.
Machine Learning for FinanceFive people quote the accuracy of one credit model, all five are right, and the number that decides how much money it makes is none of them.
Commercial Real Estate InvestingThe equity earned 8.6647 per cent and the investor received exactly 8.0000 — the preferred return, and nothing above it.
Mergers and AcquisitionsThe board paper says the deal creates 13,436,667 of value. The arithmetic says it destroys 17,530,855. Nobody is lying.
DerivativesThe treasury report says the hedge cost 1,233,698. That is the interest differential, not a cost.
Treasury ManagementFive cash balances for one company, all correct and 145,600,000 apart — and the revolver that is two-thirds of the liquidity leaves at a revenue fall of 8.4127 per cent.
Financial Planning and AnalysisRevenue 3.0190 per cent above budget and operating profit 16.3209 per cent below it, in the same quarter, with every figure correctly stated.
Energy TradingA position report that is 91.7031 per cent hedged and correctly computed, on a book that is short 2,542,000 MWh — and a margin call of 198,400,000 the next morning.
Construction Cost ControlA gap of 2,852,261 against 732,546 of headroom, and the 85.8 per cent of it that was knowable at signature.
Trade FinanceSix routes to payment on one 4,200,000 export order cost between 178,040 and 223,268, a spread worth 14.8 per cent of the margin, and a day of buyer credit costs 1,031.76.
Cost AccountingOne factory costed twice on the same 13,440,000 of overhead, and 4,053,091 moves between four product families.
Contract ManagementA bid 5.50 a unit cheaper, signed on paper worth 9.81 a unit more — and 94.68 per cent of it was knowable on the day of signature.
Capital MarketsFour defensible readings of one bond, the cost of an issue under each convention, and the placement discount computed at a constant discount.
Financial RegulationThree ratios pass and the fourth is in breach by 1,956.0 million: the output floor, the liquidity buffer after encumbrance, and the loan split.
Bank ManagementFour defensible readings of one balance sheet, the deposit beta measured two ways, and the liquidity that lasts 3.9 days.
The Real Estate WorkoutFour ways out of one broken loan, discounted to today, and the 58.7 cents at which a payoff beats enforcement.
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