Price realisation
How much of your list price survives all the way to the invoice.
01 What it is
Why anyone looks at this number
How much of your list price survives all the way to the invoice.
The gap between list and net is where most pricing money is lost, and it is almost never reported. A point of realisation is usually worth more than a point of volume.
02 The formula
How it is worked out
Price realisation = net_revenue ÷ list_revenue grain : month × customer × product unit : percentage source : ERP pricing conditions and billing
Off-invoice items — annual rebates, marketing allowances, settlement discounts — sit in accruals, not on the invoice. Leave them out and realisation looks several points better than it is.
03 Worked example
The same number, with real inputs
| List revenue | €57.5m |
| Net revenue | €50.0m |
| Calculation | 50.0 ÷ 57.5 |
| Result | 87.0% |
13 points, or €7.5m, is given away between the price list and the bank. Recovering one point is €575k of profit — and no factory has to make anything extra.
04 What moves it
Four things that actually change this number
Discount approval limits
What a salesperson can give away without asking.
Rebate structures
Volume tiers that pay out on business you would have won anyway.
Payment terms
Extended terms are a discount, priced in days instead of percent.
Freight and handling
Absorbed delivery cost is a discount that never appears in a price report.
05 Where the number lives
The system, the record and the fields
| System of record | Key record | Fields you need |
|---|---|---|
| ERP pricing conditions and billing | Condition record joined to Invoice line | list_price, condition_type, condition_value, rebate_accrual, payment_terms |
Off-invoice items — annual rebates, marketing allowances, settlement discounts — sit in accruals, not on the invoice. Leave them out and realisation looks several points better than it is.
06 How it goes wrong
Three ways this metric misleads people
Measuring on-invoice only
The invoice shows the visible discounts; the expensive ones are settled quarterly.
Fix: Build the full waterfall from list to net, including accrued items.No waterfall by customer
A group average hides the handful of accounts where realisation has collapsed.
Fix: Rank customers by realisation and look at the bottom decile.Treating it as a sales problem only
Freight terms, minimum order quantities and returns policy all sit outside sales.
Fix: Give each step of the waterfall an owner.08 Questions
Frequently asked
What is a price waterfall?
A step-by-step walk from list price down to the money you actually keep, with one step per type of discount. It is the standard way to find where price is being lost.
Why is off-invoice discounting so dangerous?
Because it is invisible at the point of sale. The person agreeing the deal sees the invoice price and not the rebate that follows, so the true cost of the deal is only known months later.
One definition, everywhere it is used
SCIKIQ stores this metric once and serves it to every dashboard, board pack and agent that asks.