Price-volume-mix analysis (PVM)

BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED 2026-11-06

// THE SHORT ANSWER

Price-volume-mix analysis splits a change in revenue or gross profit into the part from different prices, the part from selling more or fewer units, and the part from a shift in which products or customers make up the sales. A business that sold 1m units at US$50 and now sells 900,000 at US$60 has grown revenue 8%, to US$54m, from a volume effect of minus US$5m and a price effect of plus US$9m. A lender asks for the split because price rises can hide lost customers and a favourable mix may not repeat. Methods differ in where they put the overlap between price and volume.

BASIS  Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.