02 · 6 WEEKS
Price and Margin Programme
For component suppliers, distributors and capital-goods sellers under price pressure.
Profit is usually lost in discounts, not in the list price
In industrial companies the pricing problem usually starts not with the list price but with the discounts given in the field. A discount that stretches a little further on every quote takes points off gross margin by year end. A company with a 25% gross margin that gives a 10% discount needs 67% more orders to keep the same profit. In the Price and Margin Programme I map your real margin by customer and product and show where discounts are eating profit.
Then I rebuild your discount policy: tiers, approval limits, an authority matrix and the price list structure. It becomes clear who can give which discount and on what terms. We also plan how the price increase is communicated to customers and take it to the field with your sales team.
Part of the fee depends on the result. On top of the fixed fee I take 10% of the additional gross profit measured with approved data over the first 12 months. We agree the baseline period before the project starts, so what will be measured is clear from day one.
Scope and deliverables
Scope
- Margin and discount analysis by customer and product
- Rebuilding the price list and discount structure
- Designing the quote approval process
- Communicating the price increase to customers and rolling it out with the sales team
Deliverables
- A margin map by customer and product
- New discount and approval rules, with an authority matrix
- A price list structure
- A price-increase communication plan
- An implementation guide for the sales team
How the success fee is measured
- Baseline: Agreed together before the project starts.
- Measurement: The change in gross profit, calculated from approved sales and cost data.
- Payment: At the end of month 12, or quarterly as set out in the contract.
- Cap and minimum: Set in the project proposal.
Suits: Companies with rising discount rates or a price list more than a year old, and some say over their prices.
Not a fit: Companies whose prices are set entirely by an OEM customer or by tender specifications.
- Payment: 50% on order confirmation, 50% on delivery
- Fees for engagements longer than three months are indexed to Turkish CPI
- Proposals are valid for 30 days
- I never advise two competing companies on the same project or tender
- For dealer agreements, I set the commercial terms and your lawyer drafts the legal text
Frequently asked questions
How do you build a discount policy?
First I measure the actual discount and margin by customer and product. Then I write the discount tiers, the approval authority for each tier and the exception rules. The result is a clear set of rules and an authority matrix your sales team uses in the field.
Won't we lose customers if we raise prices?
You may lose some orders; what matters is how much that loss affects profit. For a company with a 25% gross margin, a 10% price increase still raises profit even with up to 28.6% volume loss. Inside the programme we plan which customers get the increase, in what order and how.
How is the success fee calculated?
We agree the baseline period before the project starts. The gross profit difference is calculated from approved sales and cost data over the first 12 months, and 10% of it is paid as the success fee. The cap and minimum are set in the project proposal.
Does it help if our OEM customer sets our price?
If your price is fully set by an OEM or a tender specification, this programme is not a fit. If you have product or customer groups where you have a say on price, the programme focuses on those.
Is it a fit? 20 minutes will tell.
In the introductory call I listen to your company and your needs. No data, no analysis. If it makes sense, you get my fixed-fee proposal within 48 hours.