Plain definition
A mix variance measures the effect of the composition of products, customers, or inputs differing from plan while the total can remain unchanged. It reveals that not all units or sales carry the same margin or resource demand.
Illustrative example
Monetary examples use Saudi riyals (SAR). The same principles apply in other currencies.
A business sells 1,000 units as planned, but premium units with contribution fall from 500 to 300 while standard units with contribution rise from 500 to 700. Total contribution is rather than the planned . Management reviews availability and discounting rather than treating volume as the problem.
Why it matters
A business can hit its unit target while missing cash contribution. Mix analysis prevents volume success from concealing a shift toward lower-margin or harder-to-serve work.
Practical consequence
State the planned mix, actual mix, and contribution or cost basis. A mix change can be strategically sensible, so test margin, capacity, and customer value together.