Translation: Sales Mix Variance (or Sales Mix Effect) = Sales Mix Variance
Sales Mix Variance is the change in total profit or revenue resulting from actual sales proportions of different products or services differing from what was planned or expected, assuming total sales volume remains constant.

Simple definition:
Imagine you own a café that sells regular coffee (low profit) and premium desserts (high profit). If, in one month, you sell a large quantity of desserts and less coffee, your total profits will rise significantly, even if the total number of orders is the same as usual. The difference in profit that results solely from a change in the “mix” of what you sold—focusing sales on more profitable products—is called the “sales mix effect.”

Note:
The sales mix effect separates the impact of “product mix” from the impact of “total sales volume” or “price changes.” The effect is considered “positive” (favorable) if sales shift toward products with higher profit margins, and “negative” (unfavorable) if the share of sales from lower-margin products increases—even if the company’s total revenue rises.

Example:
Suppose a company sells two products: Product A earns 10 riyals per unit, and Product B earns 30 riyals per unit. The company planned to sell 100 units, split evenly: 50 of A and 50 of B, for an expected profit of: (50 × 10) + (50 × 30) = 2,000 riyals.
In reality, the company sold 100 units, but the mix was different: 80 of A and 20 of B. Actual profit would be: (80 × 10) + (20 × 30) = 1,400 riyals.
Here, the total quantity sold did not change (100 units), but the company earned 600 riyals less than expected because of the unfavorable “sales mix effect” (sales of the less profitable product made up a larger share of the mix).

What does this mean for you?
A true understanding of profitability: It shows that increased sales volume or revenue does not always mean higher profits; what you sell is just as important as how much you sell.
Guiding marketing strategies: It helps companies direct sales teams to focus on products with higher profit margins rather than simply meeting volume targets by selling inexpensive products that are easy to market.
Accurate performance evaluation: It explains to management and investors why a company’s gross profit margins decline (or improve) despite stable selling prices and production costs.

Frequently asked question:
Is the “sales mix effect” the same as “Sales Volume Variance”?

Answer: No. “Sales Volume Variance” measures the change in profit resulting from selling a greater or smaller total quantity than expected, regardless of the product. The “sales mix effect” measures the change in profit resulting from a change in each product’s proportion or share of that total quantity. In other words, the first answers the question, “Did we sell more or less overall?” and the second answers, “What exactly did we sell?”