Quartz had an article on Unilever’s sales of ice cream. This graph tells an interesting story.
In the beginning of 2022, notice there was little in change in price, revenue, or unit sales. Then, they started raising prices. Unit sales didn’t change throughout most of the year, so the price increases led directly to growth in revenue (and profit).
Towards the end of 2022, unit sales started declining and has been on a steady decline since. Price increases have continued. Higher prices combined with lower unit sales still showed growing revenue, but not as fast as when unit sales were consistent.
The chart doesn’t show profit or margin, but let’s assume that margins grow as prices increase, which is true as long as prices increase faster than costs. Since inflation is slowing, these 10% price increases surely increase margins.
Now, here is the question for you. Would you rather have higher margins or higher unit sales? Think about it. What factors would drive your decision?
Share your comments on the LinkedIn post.
Now, go make an impact!
