What is the calculation for consumer value index (CVI)?

The consumer value index (CVI) is calculated by dividing wholesale cost by retail price. This calculation reflects the proportion of the retail price that is accounted for by the underlying costs. A higher CVI indicates that a greater proportion of the retail price is derived from the costs incurred, while a lower CVI suggests a larger markup from the wholesale to the retail price.

Understanding the CVI is crucial for analyzing product pricing strategies and consumer perception of value. It provides insights into how effectively a product is priced relative to its cost, enabling businesses to assess their pricing models and marketing strategies. By focusing on this calculation, businesses can effectively communicate value to consumers and optimize their positioning in the market.