> For the complete documentation index, see [llms.txt](https://docs.fabricplan.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.fabricplan.com/planning-sheets/how-tos/measure-and-row-based-planning/measure-based-modelling.md).
# Measure-based modeling
Measure modeling is used to organize the measures defined in a semantic model into a hierarchical structure that reflects business performance. This type of modeling enables users to analyze how changes in one measure propagate through related measures. For example, if there is a change in material cost, you get to see the changes cascading up to the net profit level.
Typically, when the measures are placed in the value field, they are displayed as column items. It is difficult to create a hierarchy for measures and analyze the performance. A Measure Model addresses this limitation by allowing you to build a measure hierarchy that can be applied across all row category items.
**Using a Measure Model, you can:**
* Organize measures according to business requirements.
* Perform planning and simulations at the measure level.
* Analyze the cascading impact of changes across the hierarchy in a single view.
### Configure measure-based model
1. Create a planning model by assigning **row** fields, **column** fields, and measures under the **value** field.
Consider the revenue model in the following image.
2. Navigate to the **Model** ribbon and select **Measure Model.**
3. The Measure model canvas opens, displaying all the measures assigned to the planning sheet.
4. Now you can create the required hierarchy using the measures list. Select **Add measure** > **Formula.**
5. In the side panel, enter the title as *Gross Revenue* and define the formula as: `Sales Volume * Avg Selling Price`.
6. Select **Create**.
7. The newly created *Gross Revenue* measure is added to the measures list. Drag the *Gross Revenue* measure onto the top section of the canvas to create a hierarchy.
8. Gross Revenue is now available on the canvas screen. Select *Sales Volume* and *Avg Selling Price* from the measure list. From the **Insert Measure** list, select Gross Revenue and select **Insert.**
9. The measures are now placed as child rows under Gross Revenue. This creates a *Gross Revenue* measure hierarchy.
10. Now, drag and drop the *Discount and Returns* measure to the **Drop from measure list** section. This measure is added outside of the *Gross Revenue* hierarchy as a sibling of the *Gross Revenue* measure.
All the measures are now part of the canvas.
To create any measure hierarchy and complete the model, follow these steps 4 through 10.
11. Select **Add measure** and select **Formula** again. Enter the title as *Net Revenue* and define the formula as, `Gross Revenue - Discount and Returns`. Select **Create**.
12. Drag the *Net Revenue* measure onto the canvas. Drag the *Gross Revenue* measure below *Net Revenue* until it snaps into place as its child. Repeat this step for the *Discount and Returns* measure so that both measures appear as children of **Net Revenue**.
13. Once the *Net revenue* measure hierarchy is created, select **Back to Home** in the toolbar.
14. To display the measures in rows, in the **Planning** screen, select **Layout**, and under **Measures,** select **In Rows.**
15\. The measures are now displayed in a hierarchical structure under each row category.
#### How the Measure model helps analyze business performance
A Measure Model automatically cascades simulation impacts through both the measure hierarchy and the row hierarchy. This enables users to understand how changes in business drivers affect overall performance.\
For example, suppose the sales volume of *Brazil* is increased through simulation; the impact is reflected in *Brazil*'s gross revenue and net revenue. The impact can also be seen on its parent *Latin America* up till the top level.
You can create multiple scenarios and perform simulations. These scenarios can be compared to understand which driver yields better performance for the business.
### Creating scenarios and perform simulations
This section explains the steps to create a scenario and perform simulations in a measure model to understand the impact on the overall business performance.
1. Once the measure model is created, in the **Planning** ribbon, select **Layout** and select **Tree**.
2. The model is displayed in a tree structure expanding from the grand total through regions, countries, and the measure hierarchy.
3. In the **Tree View** ribbon, select **Display** and toggle off **Show Header KPI** for a cleaner view.
4. Select **Create New Scenario** from the ribbon. Enter the **Scenario name** as "Best Case"**.**
5. Select any node in the tree, the simulation panel appears on the side. You can perform simulation by either entering simulation % or using a slider.\
For example: For the *United States* node, apply the following changes:
* Sales Volume: 5%
* Avg Selling price: 3%
* Discount and Returns: -2%
{% hint style="info" %}
**NOTE**\
\
You can either enter a simulation % or simulation value by just selecting the value section.
{% endhint %}
6. The simulation results automatically cascade through *Gross Revenue* and *Net revenue* at the measure level and to *North America* at the parent level. Select the down arrow to expand and see all the measures listed for each node in a hierarchical format.
7. Repeat the process to create multiple scenarios and compare them to determine which business drivers produce the best performance.
### Benefits of measure model
A measure model helps organizations:
* Organize measures into meaningful business hierarchies.
* Perform simulations at the measure level.
* Visualize the cascading impact of changes across measures and dimensions.
* Improve planning and decision-making with a consolidated hierarchical view of business performance.
### Related Content
For FAQ's of measure model, you can refer to this [section](/resources/plan-preview-frequently-asked-questions/measure-model.md).
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