Headroom

Headroom is margin you have not yet spent on discounting. It is measured per product bucket, in dollars, and answers one question: if you wanted to pay for a price move here, could the bucket afford it?

Two dials, no score

Every bucket is read against two norms computed from your own sales in the period: the catalogue's margin and the catalogue's discount depth.

• Lever - depth is at or under the norm and margin can afford more. There is room.
• Committed - the headroom is already being spent, as giveaways or as discounting deeper than the norm.
• Anti-lever - margin is materially below the norm. Nothing to spend; a cost or price review is worth more than a discount.

Boundary cases carry no label on purpose. A label that fires on noise teaches people to ignore labels.

Room to norm

For a lever bucket, room to norm is the extra discount dollars the bucket could take before it reaches the catalogue's depth norm, capped so margin never drops below the floor. It is arithmetic at today's volume: it prices what a move would cost and says nothing about what it would return.

The cap is named. Discount policy means the depth norm you set is the limit, and changing the policy changes the room. Margin floor means viability is the limit, and spending further would sell below what the bucket can bear.

Permission, not a signal

Headroom says a bucket could afford a move. It does not say a move is wanted. The raise signal comes from the market: the brand cohort on competitor shelves, and where your price sits against the cheapest same-brand listing. A KVI below the market has headroom the engine may choose to spend; a bucket with room and no market case has permission and no reason. See How the pricing engine decides.

Giveaways are spend, not sales

Promotional lines are kept out of margin and depth, so those figures describe commerce rather than the marketing budget. The cost of goods given away is shown beside each bucket as promo COGS. On vape and concentrate buckets it is tagged as clearance, because giveaways there are expiry clearance by policy, never promotion.

Where you see this

• Headroom report - every bucket, ranked by gross profit.
• The Pricing landing page, under "Where the money is".
• KVI - the We are below card names products with headroom against the market.
• Merit gaps - the products behind a bucket.