Summary: The Product–Volume–Margin Chart tool is used to construct a picture of the “business health” of a product or service. The one-page chart is designed to provide a clear and concise “current state” business profitability picture by casting revenue of key product/service forms in Pareto fashion against a corresponding profit metric for each (we use Gross Margin) plotted in bullet point form. Concurrently the chart structure provides a means for quickly developing a deeper insight to product/service profitability issues that may exist. The PVM analysis is among the most helpful tools in our arsenal, and is one of the first, if not the first tool we use entering a new situation. Many companies we encounter simply have not pulled information together in this way, for a variety of reasons (numbers being held close to the vest, legacy ERP shortcomings, sales reporting buckets being different, etc.) The tool shows the user, especially those who have never done a comparison like this, how to structure the product/service forms, how to choose profit metrics and construct them if necessary.
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Emerald Publishing Limited
Copyright © 2018 Steve Fairbanks and Aaron Buchko