Gross margin driver tree

This driver tree treats gross margin as a result of revenue quality and cost to serve. Revenue quality includes realised price, discounting, and product mix. Cost to serve includes materials, labour, freight, and the efficiency with which fixed production costs are absorbed. The tree is useful because price improvement and cost reduction can produce the same top-line margin result but require different action. Add actual values, budget values, and variance drivers to convert it into a management model. Be explicit about whether margin is measured in dollars or percent, and keep returns, rebates, and warranty costs in the appropriate branch.