What is TPR efficiency?
Definition: TPR Efficiency measures the financial effectiveness of a temporary price reduction, comparing the additional revenue generated to the incremental costs incurred from the TPR.
Calculation: This ratio is calculated by dividing the revenue uplift (the difference between actual and baseline revenue) by the incremental costs of the TPR.
Incremental costs are the price reduction given in total for all units sold with a TPR. Values greater than 1 indicate, that the price reduction generated more incremental revenue than it costs the retailer, values smaller 1 indicate the opposite.
Example: If the revenue uplift is 3.5 times greater than the cost of the price reductions, the TPR Efficiency is 3.5. Phrased differently – Incremental revenues of the promotion were 3.5 times higher than the price reduction given on all sales units.
