price waterfall

A price waterfall is an analysis method for visualizing the realization of prices.

The price waterfall illustrates how gross list prices are transformed into net prices which are in fact achievable on the market. Taking the gross price as a basis, all sorts of margin reduction are visually represented in the form of a waterfall. This clear depiction of inflows and outflows allows for a simple identification of levers for margin optimization. The use of this analysis method only makes sense if complete information can be guaranteed across all levels. Depending on various customers or segments, the design of the price waterfall can entail significant differences, as the amount of discounts or rebates (bonuses) granted may vary. A differentiated consideration of the price waterfall by channel or segment can therefore be quite useful.