What is draw vs commission

Situation: Our commissions are growing way faster than revenues

Let’s say you are looking revenues & sales commissions of your company for last few years. The data looks like this:

And you want to highlight the fact that commissions are growing faster than revenues.

So you plot YoY growth rates for revenues & commissions.

Problem: The chart of YoY growth rates is not convincing

Take a look at the chart. It doesn’t convey the message that we want. At best it says “revenue growth is less than commission growth”

How to convey the message “Commission growth is a problem for us” ?

Option 1. Use indexed charts

When comparing 2 sets of values (that are in different order of magnitudes) over time, we can use indexed charts . They can tell the story of how the values have changed over time clearly.

Here is the indexed chart for our data:

How to create this chart?

Simple. Just follow below steps.

  1. Calculate index values. Assume first year value for each series as 100 (so revenues = 100, commissions=100 in year 2010)
  2. For next year, calculate the value as this year value / first year value
  3. Plot

    these indexed values on a line chart

  4. Adjust the line chart axis minimum to 1 (or 100%) if all values are >1
  5. You are done

Option 2. Visualize ‘for every % in revenue growth, commission grows by…”

We can calculate what is the change in commission growth rate for every % growth in revenues & plot this. This will depict the situation in a powerful & dramatic fashion, like this:

How to create this chart?

Even simpler. Just do these steps:

  1. Calculate % values by dividing YoY commission growth with YoY revenue growth
  2. Plot this as a column chart
  3. Draw a line at 100%
  4. Add a text box at this line and write “Ideal” on it.
  5. You are done.

Download Revenue vs. Commission growth charts

Click here to download the example workbook . Examine the formulas & chart settings to learn better.

How would you present this information?

My favorite approach is to use indexed charts. They are designed for this exact purpose.

What about you? How would you visualize this kind of information? What charting techniques will you use to get your message across? Please share your inputs in the comments section.

Source: m.chandoo.org

Category: Forex

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