What a merit gap is

A merit gap is a product whose merit tier and price tier disagree. Merit says what the product deserves to cost; the price band says what it does cost. The gap is the distance between them.

Merit

Merit is a score built from several inputs, each weighted for the product's format: potency (a percentile within the same format), sales behaviour (how it sells and how much it depends on discounts), brand reputation, any operator override, and in some formats a quality composite. Products are ranked within their bucket: top 20% Premium, bottom 30% Value, the rest Mid. A bucket needs at least 10 products and 10 distinct scores to be ranked; otherwise its products show under "Can't be ranked".

The Product pricing page shows the multiplication: a product can sit high on potency and still rank Value when potency carries little weight in its format.

Price tier

The price tier is a band lookup, not a ranking: which accepted Value, Mid or Premium band the current price falls in.

A format's bands are named for the number of price clusters its sales contain, so a format with two bands has no band called Mid. A merit tier the bands do not name is placed on the ladder by position, weighted by each band's share of the volume: in a format where Value carries most of the units, a Mid merit tier lands on the Value rung. It is the rung that is compared, not the word.

The gap

• Underpriced - merit above the price tier. "Sells like the $59-60 shelf, priced $48.00."
• Overpriced - merit below the price tier.
• Aligned - the two agree. "Priced right."
• Not selling - aligned, more than 2 sellable units, and more than 120 days of supply on 30-day sales. A merchandising question more than a pricing one.

A price above every point the format has been observed to sell at gets no gap at all, and no proposal. Bands cover the whole price line so that nothing is unclassifiable, which means the dearest band also holds prices far above where it traded: a $40 eighth in a format whose dearest observed price is $18 used to read "Priced right." Your own sales say nothing about $40, so the screen says that instead of naming a target.

The engine will not draft one either. Where the format's cheapest rung carries most of its volume, a Mid merit tier lands on that rung, and a craft product ranked Mid was being walked toward it a capped step at a time - a $40 eighth proposed at $33.95 with "the mid band transacted around $15.00" printed as the reason. Above the dearest observed price there is nothing to aim at, so the merit gap stays quiet and leaves the product to cost, competitor prices and headroom, which have evidence about it.

An aligned product gets no Merit gap proposal in a draft, wherever in its band the price sits. A bucket with only one accepted band has no merit gaps to propose at all, because every price is inside that band. A price between two bands belongs to neither, so it counts as a gap.

The Move is the distance to the merit band's price, the middle of where that band transacted. The list is ordered priciest first within each format, then by the biggest move, because the same gap says more about an expensive product than a cheap one.

Held

A gap the engine will not act on is held: the measured price response does not support a move in that direction. The row stays visible, dimmed, with the reason. A held gap is information, not a proposal.

In an event

A gap that is already being acted on leaves Merit gaps: while its product waits in an event that is not live yet, and while a live event is measuring it, for the whole measurement window. A move in the middle of a window would spoil the measurement. The morning after the window's last day the event is marked measured, and the product is back with whatever gap the latest analysis gives it.

Locked

Products and brands on the no-touch list never appear as proposals.

Where you see this

Merit gaps, Product pricing, the Where the money is table on Pricing.