Figure 1From “What is price realization? List price is not the cash collected”
A synthetic price realization waterfall
Trace a reference price through deductions, pocket price, and collected cash before naming a realization rate.
Figure 1A synthetic price realization waterfall
| Waterfall step | Amount (synthetic units) | What it represents |
|---|---|---|
| List or reference price | 1,200 | Declared starting reference |
| Order-size discount | -60 | Pre-invoice transaction term |
| Negotiated discount | -60 | Customer-specific invoice term |
| Invoice price | 1,080 | Amount shown after the two invoice deductions |
| Prompt-payment credit | -20 | Transaction-specific payment term |
| Service credit | -15 | Declared service-related deduction |
| Freight absorption / concession | -25 | Commercial absorption of delivery cost |
| Pocket price | 1,020 | Revenue remaining after the listed waterfall items |
| Uncollected balance | -20 | Amount not received in the declared collection period |
| Collected cash | 1,000 | Receipt under the example's collection rule |
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Source: Author's synthetic reconciliation grounded in Marn and Rosiello (1992). Values are illustrative units, not a benchmark, recommendation, or observed ratio.
Source and evidence
Each line names a claim related to this exhibit, its source, and how it was checked.
- A T01-MR92-C1 Marn and Rosiello make net realized price for each order or transaction the object of transaction price managementMarn and Rosiello (1992), full-text receipt
- A T01-MR92-C2 Their pocket-price waterfall moves from list price through invoice price and transaction-specific deductions to pocket priceMarn and Rosiello (1992), full-text receipt
- A T01-MR92-C3 Prompt-payment discounts, annual or retroactive volume rebates, cooperative advertising or marketing allowances, freight, and other items can sit after invoice price in the waterfallMarn and Rosiello (1992), full-text receipt
- B T01-OWN-C2 List or reference price, invoice price, pocket price, and collected cash answer different questionsAuthor taxonomy
- B T01-OWN-C4 The synthetic example produces 90.0% invoice-to-list, 85.0% pocket-price-to-list, 94.4% pocket-to-invoice, and 98.0% cash-to-pocket ratesAuthor synthetic arithmetic
Grades: A, verified against the printed page of the primary source · B, primary source, text layer only · C, authoritative secondary · D, reported.
From the essay
Pricing & revenue architecture
What is price realization? List price is not the cash collected
Price realization shows what remains after transaction terms and deductions, but only a named denominator makes the rate interpretable.
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