How is dollar volume calculated?

The calculation of dollar volume is determined by multiplying unit sales by the unit price during a defined period. This approach provides an accurate assessment of the total sales revenue generated from the sales of a particular item or category within that timeframe.

Using this method, one can clearly see how changes in either the number of units sold or the price per unit can significantly impact total revenue. For example, if the sales strategy includes a price promotion leading to an increase in units sold, the dollar volume will reflect that increase, highlighting the effectiveness of the strategy.

This understanding is crucial in category management, where analyzing dollar volume helps assess performance metrics, inform pricing strategies, and make decisions about product assortment and inventory management.