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TERM
Price Index to Category Average
Your price level relative to the category average.
Definition
Price index equals your average price divided by category average price times 100.
How to Calculate
Divide brand average price by category average price, multiply by 100.
Why it Matters
Standardizes price comparisons.
Key Advantages
Highlights over- or under-pricing.
Example
Index of 105 means 5 percent above average.
Use it to
Index item or brand price to the category average to judge relative value perception. Monitor changes to detect drift that may affect velocity.
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