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Methodology

Price Point Rounding Impact Planner methodology

Measure the contribution effect of a rounded price.
Duc Nguyen X.By Duc Nguyen X.· Founder, Margin101Last reviewed: View update historyMethodology

Educational only: Business decision support, not accounting, tax or legal advice.

Privacy: Calculations run locally; Margin101 does not receive your commercial inputs.

Update policy: Reviewed when formulas or official dependencies change.

Scope: Market-neutral small-business planning using your own assumptions.

1. Formulas and units

Contribution Delta Ex Tax
contributionDeltaExTax = rounded contribution − current contribution

Where

contributionDeltaExTax
Contribution Delta Ex Tax (currency units, ex tax)Source: Calculated output
roundedContributionExTax
Rounded Contribution Ex Tax (currency units, ex tax)Source: Calculated output
Price Change Ex Tax
priceChangeExTax = rounded price − current price

Where

currentPriceExTax
Current price (currency units/product unit, ex tax)Source: Business record
roundedPriceExTax
Rounded price (currency units/product unit, ex tax)Source: User decision
priceChangeExTax
Price Change Ex Tax (currency units, ex tax)Source: Calculated output
Price Change Rate
priceChangeRate = rounded price ÷ current price − 1

Where

currentPriceExTax
Current price (currency units/product unit, ex tax)Source: Business record
roundedPriceExTax
Rounded price (currency units/product unit, ex tax)Source: User decision
priceChangeExTax
Price Change Ex Tax (currency units, ex tax)Source: Calculated output
priceChangeRate
Price Change Rate (decimal rate)Source: Calculated output
Rounded Contribution Ex Tax
roundedContributionExTax = (rounded price − unit variable cost) × expected units

Where

roundedPriceExTax
Rounded price (currency units/product unit, ex tax)Source: User decision
unitVariableCostExTax
Variable cost (currency units/product unit, ex tax)Source: Business record
expectedUnits
Expected units (whole product units/comparison period)Source: User assumption
roundedContributionExTax
Rounded Contribution Ex Tax (currency units, ex tax)Source: Calculated output

Money inputs and outputs use the currency selected in the scenario without changing the canonical methodology. Rates, margins, utilisation and buffers are entered as percentages and converted to decimal values for calculation.

2. Worked example

Input assumptions

The worked rows below come directly from the registered engine and visible default fixture.

Calculation and outputs

Example

The worked rows below come directly from the registered engine and visible default fixture.

Contribution Delta Ex Tax
500 currency units
Price Change Ex Tax
0.5 currency units
Price Change Rate
0.5%
Rounded Contribution Ex Tax
45,000 currency units

The exact engine-derived outputs are shown in the labelled rows below.

Interpretation

The period contribution change measures the exact commercial effect of moving to the rounded price point.

3. Validation and boundary checks

  • All inputs must be finite and within the visible validation boundaries.
  • Rates use decimal values below 100%; whole-unit thresholds round upward only where the engine names that rule.
  • All compared monetary inputs use one consistent ex-tax basis and planning period.

4. Assumptions and source classification

  • Every cost, price, fee and volume is supplied by the user; no market benchmark is inferred.
  • Indirect tax is excluded from retained commercial economics unless a dedicated input explicitly models it.
  • The engine retains full precision and display formatting never feeds back into calculation.

This planner has no current policy-data dependency. Its commercial assumptions are user supplied. Registered family-level regression suites exercise the shared business-logic engine and worked-result reconciliation.

5. Limitations

  • The model does not forecast demand, competitor response, supplier negotiation outcomes or capacity.
  • It does not replace accounting, tax, legal or financial advice.

This is educational decision support, not tax, accounting, legal or financial advice. Check the treatment of your actual transactions under the rules that apply to your business and seek qualified advice where appropriate.

6. Update and evidence policy

Registered family-level suites test formula invariants and example reconciliation; the release ledger records that coverage without claiming a separate oracle for every line of public copy. There is no official threshold or benchmark to refresh for this planner. Commercial inputs remain user-supplied because they vary by business and contract.

Change history

  1. : Initial public release of the planner and methodology after pre-launch calculation, content, source and interaction review.

Related reading

Guides to interpret the decision and its assumptions.

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