Maharaj sounded confident.
“Tenali… we pushed sales this quarter using heavy discounts.
Revenue jumped from 80 Lakhs to 1.1 Crore.”
“And profit?” Tenali asked
Maharaj paused.
“…fell from 16 Lakhs to 9 Lakhs.”
Tenali nodded.
“Let us see the numbers clearly:
Selling Price reduced: from INR 500 INR 440
Variable Cost: INR 380
Contribution per unit: from INR 120 to INR 60 (down by 50%)
Volume increase: +30%”
He looked at Maharaj.
“You doubled your effort…
for half the earning per unit.”
Maharaj was silent.
“This is where CVP Analysis (Contribution Focus) exposes the truth,”
Tenali continued.
“To maintain earlier profit of 16 Lakhs at INR 60 contribution…
you needed to sell 2.67 times the original volume.
But you increased only 1.3 times.”
Maharaj leaned forward.
“So more sales… but mathematically less profit.”
“Exactly, Maharaj,” Tenali replied.
“Discounting without contribution logic is not strategy…
it is silent value destruction.”
Maharaj exhaled.
“Tenali… we celebrated revenue… while killing profit.”
Tenali smiled.
“Maharaj…
topline grows ego.
Contribution grows business.”
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