Why Pack Ladders That Hold on List Price Break on Promotion

Where do pack ladders break?

A pack ladder is the set of prices per kilo, or per liter, across a brand's pack sizes, and the bigger pack should cost less per kilo. A study of one American grocery chain's year-end prices, published in July 2003, found the bigger pack more expensive per unit of measure in the store in 11.1 percent of 1,247 pairs of pack sizes, across 800 brands. Of those inversions, 39.9 percent already existed in the wholesale price the chain paid. The other 60 percent were created at the shelf: 6.7 percent of all pairs (60 percent of 11.1 percent), or about one pair in fifteen.¹

Those came from the retailer's own pricing: in the same study, price setters facing a cheaper competitor cut the price of their fast sellers, often the small pack, and left the bigger pack alone. The chain's margins show the cut: on small packs in inverted pairs it earned 12.5 percent of the shelf price, against 23.4 percent on small packs in pairs where the bigger pack had the lower unit price.¹ The authors had no promotion data. They cite earlier one-day audits, which found about one inversion in seven on a temporary promotion, as showing that most are not promotional.¹

For Dutch laundry detergent at the market-leading chain, a weekly price record from September 2002 to December 2004 catches every deal week and shows a different pattern. Promotion weeks were about 12 percent of the observations (176 of 1,497) but held 110 of the 200 breaks. When the small pack alone was promoted, 97 of 100 promotions left the bigger pack more expensive per kilo, by a median of 28.2 percent.²

Pack ladders break on the price list itself, and in two ways after it: in the retailer's everyday pricing, and in deal weeks, where the break is larger and the brand's promotion money usually pays for much of the discount.

Why are shoppers more likely to notice now?

Since 6 April 2026, larger shops in Britain have had to show "each selling price and each unit price applicable to the product" when it is offered at more than one price, which covers loyalty prices and multi-buys on identical packs.³

A consumer watchdog has also publicized inversions. On 14 September 2026 Hong Kong's Consumer Council reported on the online prices of three supermarket chains. In 7 of 15 same-brand pack groups, the bigger pack's unit price was 2 to 35 percent higher than the smaller one's "during certain periods". The council did not say whether promotions caused them.⁴

The authors of the Dutch study concluded that most shoppers did not notice such breaks: the bigger pack's sales fell by only 14.4 percent in the median case (20.5 percent in their model), and for premium brands by nothing measurable. Only value-brand shoppers switched.² Unit-price labels lower the effort of noticing: a study of canned tuna, published in August 2026, found shoppers in American states that require them "three times more responsive to unit price changes" than shoppers elsewhere.⁵

Unit-price labels on loyalty and multi‑buy prices, required in Britain since April 2026, now show shoppers the moment a bigger pack becomes more expensive per kilo.

How does the Academy read a pack ladder?

The Academy's lesson on the incentive curve reads a ladder with one number, the Incentive Index, and says to run it "again at deal prices, because a ladder that is clean on shelf prices and broken on deal prices is broken for however much of the year the deal is live". The lesson reads shelf prices, which are the retailer's. A brand can answer only for its own prices, so it runs the same check on its list prices and on its deal-week prices: list price less the promotion money it pays per pack.

Take an invented biscuit brand. Its 250-gram pack, the everyday size, has a list price of 2.00 euros, or 8.00 euros a kilo (2.00 divided by 0.25). Its 500-gram pack has a list price of 3.20 euros, or 6.40 euros a kilo (3.20 divided by 0.50). The bigger pack's Incentive Index is 80 (6.40 divided by 8.00, times 100). Its saving is 20 percent a kilo (100 minus 80).

That 20 percent is a choice about value: the saving a shopper needs before moving up a size. It is not a markdown worked out from the cost breakdown. Every price here is the brand's own price to the retailer; the shelf prices are the retailer's decision.

The Incentive Index has to be run on the brand's deal-week prices as well as its list prices, because a ladder can pass on list prices and fail in the weeks the brand pays for.

What does a deal on the small pack do to the ladder?

The retailer wants a promotion on the 250-gram pack, the fast seller, and the brand considers putting 0.50 euros a pack behind it, 25 percent of its 2.00 euros list price. On the brand's deal-week prices, the small pack now costs 1.50 euros (2.00 minus 0.50), or 6.00 euros a kilo (1.50 divided by 0.25), while the bigger pack stays at 6.40. The index rises to 106.7 (6.40 divided by 6.00, times 100). The ladder has turned over: two small packs cost the retailer 3.00 euros for 500 grams (two times 1.50), against 3.20 for one bigger pack. Funding the same money as a multi-buy changes nothing per kilo, and in Britain whatever multi-buy the retailer puts on the shelf now carries its unit price.

The index gives a general rule: a deal on the smaller pack alone turns the ladder over once its depth, as a share of that pack's price, is greater than the saving, 100 minus the index. Here the deal is 25 percent and the saving 20 percent. Ordinary deal depths are far larger than ordinary ladder savings: in the Dutch data, promotional discounts ran at "25-30%", while the bigger pack's median saving outside promotions was 6.3 percent.² Even a ladder with a saving of a fifth per kilo, as here, is broken by most deals of ordinary depth.

To keep its own ladder, the brand has to keep its money behind the small pack alone below the per-kilo gap on its list prices: 1.60 euros a kilo (8.00 minus 6.40). On a 250-gram pack that is 0.40 euros (1.60 times 0.25 kilos), or 20 percent of the 2.00 euros list price, the same share as the ladder's saving. The pack roles lesson calls this line "the deepest discount the incentive curve survives". At exactly 0.40 the ladder is flat. A deal of 0.30 euros takes the small pack to 1.70 euros (2.00 minus 0.30), or 6.80 euros a kilo (1.70 divided by 0.25). The index rises to 94.1 (6.40 divided by 6.80, times 100). The bigger pack's saving of 5.9 percent a kilo (100 minus 94.1), though, is below the roughly 10 percent at which, by the incentive-curve lesson's rule of thumb, shoppers notice a saving without a unit-price label.

A deal on the small pack alone breaks the ladder once it is deeper than the bigger pack's saving per kilo, and ordinary deal depths often exceed that saving.

How should a brand fund the deal?

The Academy's lesson on the pack price matrix teaches a rule for price rises that also works in reverse, for a discount: "A flat percentage increase across all sizes leaves the ratios where they were. A fixed cash increase does not", because "the same coins are a bigger per-gram rise on the small pack".

Three funding plans keep the brand's deal-week ladder. Putting 0.50 euros on both packs cuts the bigger pack to 5.40 euros a kilo (2.70 divided by 0.50), so the index rises to 90 (5.40 divided by 6.00, times 100) and the ladder narrows. Taking the same share, 25 percent of list price, off both packs means 0.80 euros on the bigger pack, or 4.80 euros a kilo (2.40 divided by 0.50), and the index stays at 80 (4.80 divided by 6.00, times 100). Putting the same money per kilo on both means 2.00 euros a kilo (0.50 divided by 0.25), or 1.00 euro on the bigger pack (2.00 times 0.50). That takes the bigger pack to 4.40 euros a kilo (2.20 divided by 0.50). The index falls to 73.3 (4.40 divided by 6.00, times 100), steeper than designed. Equal money per pack has a limit: at 0.80 euros on both, each pack comes to 4.80 euros a kilo (1.20 divided by 0.25, and 2.40 divided by 0.50) and the ladder is flat.

The safer plans cost more. For every 1,000 packs of each size sold in the event, the brand pays the money per pack on each size times 1,000, added together. That comes to 500 euros under the small-pack-only deal, 1,000 under equal money per pack, 1,300 under the same share of list price and 1,500 under the same money per kilo. Money on the bigger pack also pays for big packs that would have sold anyway, and a ladder steeper than designed, if the retailer passes it on, pulls sales toward the pack that earns the brand least per kilo.

Two fixes keep the ladder at no extra cost: a deal on the small pack alone kept inside the ladder's saving, or the 1,000 euros of equal money per pack spread over both packs as the same percentage of each list price instead. But both make the deal on the fast seller shallower than the 25 to 30 percent the retailer may expect, so the event may sell less, and the retailer can still go deeper at its own expense.

A brand that funds deals with at least as much money per kilo on the bigger pack keeps its own ladder intact; the same money per pack on both sizes narrows it.

What does the brand control?

The brand decides only what its own money pays for; the shelf price, and how much of that money reaches shoppers, are the retailer's decisions. If the brand's deal-week prices are upside down, its promotion money is buying a bigger cut per kilo on the small pack than on the bigger one, whatever the retailer then charges. The Academy's lesson on the incentive curve sets the same kind of funding rule for a bigger pack on deal: "The promoted price stays the retailer's decision, so it can go deeper at its own expense, but your money stops paying for the break." It also warns against turning such a rule into a contract clause that stops the retailer promoting below a set price, which competition law in the EU and Britain treats as resale price maintenance.

The brand's check covers only its own money: if the retailer's everyday shelf ladder is already flatter than the brand's list ladder, a deal inside the per-kilo gap on the list prices can still break the ladder on the shelf.

The shelf price is the retailer's decision, but the brand can make sure its own money never pays for a deeper cut per kilo than its ladder allows, now that shoppers can see a break.

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