RSP-per-kg Incentive Curve: The Single Most Important Diagnostic in Pack Architecture

The price incentive curve is the single most important diagnostic in Price Pack Architecture. It plots price per unit (PPU), which is what a pack costs per 100g or per liter rather than what it costs per pack, up the side of the chart, with pack size running along the bottom. In a well‑designed portfolio, the curve slopes downward: larger packs offer a lower price per unit, rewarding consumers for buying more.

What a Downward Slope Buys You

This downward slope is the incentive, the economic reward that motivates consumers to trade up from a small pack to a larger one. Without this incentive, consumers have no rational reason to buy the bigger format. Give away too much of it and two things go wrong. Next to the large packs, the small ones start to look like poor value, and the large packs take sales away from your single‑serve packs, the one‑portion packs that earn you a healthy margin. That second one is cannibalization, volume moving from one of your own packs to another instead of coming off a rival.

Reading the Shape

The shape of the curve tells you how the range was priced:

• A smooth, gently declining curve signals coherent pricing architecture
• A jagged, irregular curve means the prices were set one pack at a time, each decision sensible on its own, with nobody looking at the range as a whole
• A flat curve signals no trade‑up incentive at all
• An inverted section, where a larger pack costs more per 100g than a smaller one, is a pricing mistake that confuses shoppers and gives away value for nothing

Every FMCG company should be able to draw its incentive curve from memory. Few could today, and that is how a mispriced step survives for years without anybody noticing it.

Price Per Unit (PPU) = Pack Price / (Pack Size x Unit Weight)

Unit Weight is the common measure you convert every pack to, so that packs of different sizes can be compared on the same footing: per 100g, per liter, or per serving.

Incentive Index = (PPU of Pack X / PPU of Reference Pack) x 100

The reference pack is the one you set to 100, and you choose which one it is. Every index after that is measured against it, so the choice moves every number on the chart. If the 150g standard, the everyday pack this lesson sets at 100, costs $3.29 (PPU = $2.19 per 100g) and the 300g family pack costs $4.99 (PPU = $1.66 per 100g), then:

Incentive Index (300g) = ($1.66 / $2.19) x 100 = 76

Measured against the 150g standard, the family pack is 24% cheaper per 100g. A 50g single at $1.49 (PPU = $2.98 per 100g) reads the other way, at ($2.98 / $2.19) x 100 = 136, because a small pack costs more per 100g than the everyday pack, and that is what a small pack is supposed to do.

Say which pack sits at 100, every time

Two people can index the same shelf and come back with different answers, because one anchored on the smallest pack and the other on the everyday pack. This lesson sets the Routine pack, the pack carrying most of your sales, at 100. Every role marker you meet later, the index a pack in that role usually sits near, is read against it. Build the index off the smallest single‑serve pack instead and you are working on a different scale, so a marker written for one of those two starting points tells you nothing about the other.

A premium biscuit brand plotted its incentive curve across five pack sizes, indexed to the 150g standard, its everyday pack:

• 50g single‑serve: $1.49 (PPU = $2.98/100g), Index 136
• 150g standard: $3.29 (PPU = $2.19/100g), Index 100
• 250g sharing: $4.99 (PPU = $2.00/100g), Index 91
• 400g family: $5.99 (PPU = $1.50/100g), Index 68
• 750g tin: $8.99 (PPU = $1.20/100g), Index 55

Where the Curve Was Leaking

The curve showed two problems. First, the 400g family pack sat at index 68 against the 250g sharing pack at index 91, so per gram it was far too cheap next to the pack just below it. A shopper moving up one size, from the sharing pack to the family pack, paid 23 index points less per gram and got 150g more biscuits. That step was so big that shoppers were leaving the sharing pack on the shelf and buying the family pack instead. Second, the 750g tin at index 55 was priced so low that it gave away margin without bringing in the volume to pay for it.

Raising the 400g to $6.99 (index 80) and the 750g to $10.49 (index 64), both measured against the 150g standard at 100, smoothed the curve out. The 400g increase held, with volume down only 3%. The 750g move cost 8% of its volume and added 17% to its margin per unit.

When an experienced RGM manager looks at an incentive curve, they are asking three questions at once.

The Three Questions a Curve Answers

1. Is the gradient commercially sensible? A curve that drops too steeply says "we are giving away too much value on large packs." A curve that barely drops says "we are not giving consumers any reason to trade up."
2. Are there structural breaks? Look for any point where the line stops falling, turns back upward, or suddenly drops much further than the steps around it. Each of those points marks a price that somebody set by itself, without comparing it with the packs on either side. Those breaks are the fixes to do first.
3. What does the competitor curve look like? If your curve is steeper than the competition, your large packs look like bargains (good for volume, bad for margin). If your curve is flatter, your large packs look expensive (good for margin, vulnerable to competitor trade‑up).

Most FMCG portfolios have accumulated pricing decisions over years of individual negotiations, cost‑plus calculations, and promotional activity. The incentive curve exposes the accumulated inconsistencies in a single picture.

Each pack on the curve also has its own price elasticity, meaning how much volume moves when that pack's price moves, and that is the link back to Pricing Lesson 1 (Elasticity). This lesson quotes no elasticity per pack role, because the published averages are brand‑level figures and the lesson has found no published figure per pack size. What the ladder rests on is a direction. A small pack is mostly bought on the shelf price in front of the shopper, and a big pack more on what a kilo costs, so the big pack is the one that responds to a saving per kilo. Pricing Lesson 1 gives you the two published averages (-1.76 and -2.62) and how widely the estimates spread around them; your own packs' numbers come from your own sales data and can sit well outside both. That direction is why a gap in price per kilo between two packs is worth considering at all. Whether you can afford one is a separate calculation: run the break‑even test against your own margin, and on a thin margin the answer is often no.