Pricing is rarely broken in one obvious place.
It leaks through discounting, inconsistent application, poor mix management, and absent governance. By the time it shows in the P&L, it has been leaking for years.
Most industrial businesses have a pricing problem they have not fully diagnosed.
The gap between what the business should be earning and what it actually earns is often 2–5% of revenue.
At 10–15% EBITDA margins, that gap is material.
This is not a sales problem. It is a commercial architecture and governance failure — and it requires an operator who has fixed it before, not a consultant who will describe it.
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When discounting is not governed by clear rules and approval processes, it becomes embedded in the sales culture. Sales teams discount as a first move, not a last resort. The business trains its customers to expect discounts — making it progressively harder to hold price.
Most industrial businesses have a significant spread in profitability across their customer and product base. A small number of customers and products generate the majority of margin. A long tail consumes disproportionate cost-to-serve. Without visibility into this, pricing decisions are made blind.
List prices, surcharges, freight recovery, minimum order values and payment terms are often set years ago and never revisited. Cost inflation is absorbed rather than passed through. The result is progressive margin erosion that doesn’t announce itself clearly in the P&L.
When margin exceptions can be approved at the sales team level without senior visibility, the exceptions become the rule. Governance over pricing decisions is the structural fix that prevents ongoing leakage.
Persistent margin compression without a clear market explanation almost always indicates a pricing discipline failure. The business may be growing revenue — but it is doing so at progressively worse economics. Without intervention, the margin compression typically accelerates as the culture of discounting deepens.
Related Mandates
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Mapping where margin is made and lost — from list price through to net realised margin, by customer, product and channel. Makes the leakage visible and quantifiable. Identifies the highest-value intervention points.
Segmenting the base by profitability, volume, strategic value and switching cost — creating the foundation for differentiated pricing that improves margin without unnecessary volume loss.
Clear list prices, defined discount bands, surcharge recovery and minimum thresholds — implemented consistently and communicated clearly to the commercial team. Removes ambiguity and reduces the frequency of exception requests.
Approval processes for margin exceptions, regular review of transaction-level pricing data, and clear accountability for pricing outcomes. This is the mechanism that makes the architecture hold over time.
In most industrial businesses, a structured pricing improvement programme recovers 1–3% of revenue in margin within 6–12 months. At a $50M revenue base, that is $500K–$1.5M in EBITDA improvement — without volume growth, cost reduction or capital investment.
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