Price erosion is the decline in the price of a product or service over time. It can occur for a variety of reasons, including increased competition, changes in market conditions, or the introduction of new technologies. Price erosion can have significant impacts on a company’s financial performance, as it can reduce the revenues and profits generated by the company’s products or services.
Calculating price erosion is a method of determining the extent to which the price of a product or service has declined over time. There are several steps involved in calculating price erosion, including:
It is important to note that calculating price erosion can be a complex process, and it may require the use of financial analysis and expert testimony. In addition, the calculations may need to be adjusted to account for changes in market conditions or other factors that may have impacted the price of the product or service over time.
Overall, calculating price erosion is a method of determining the extent to which the price of a product or service has declined over time. It is an important aspect of financial analysis, and it can help companies to understand the impact of price erosion on their financial performance and take appropriate action to address it.