Pricing and margin
Price is the biggest lever in the business and the one owners touch least. Most prices in BC companies were set years ago, copied from a competitor or inherited from a previous owner, and have drifted below cost as wages, materials and rent rose. Pricing and margin work puts the real cost of every product, job and customer in front of you and resets prices from there, with the numbers to defend each one.
What you leave with
You know the margin on every product, service and customer, and your prices are set from cost and value rather than habit.
Who it is for
- Owners who have not raised prices in two or more years
- Companies with busy teams and a profit line that does not move
- Businesses that quote by instinct and lose money on some jobs without knowing which
What we deliver
- A cost model for every product, service line or job type, including labour burden and overhead
- Margin by product, by customer and by salesperson, from your actual data
- A price list and quoting rules that protect a target margin
- A plan for the price increase, including customer communication and timing
- A discounting policy with approval limits
- A quarterly margin review built into your reporting
How it runs
01Cost it
We build the true cost of each thing you sell, including the labour time, the materials, the overhead share and the cost to serve the customer.
02Rank it
We rank products and customers by contribution margin and show you where the profit comes from and where it leaks.
03Reprice
We set new prices, quoting rules and discount limits, tested against your pipeline and your competitors' public pricing.
04Roll out
We write the customer communication, train the sales team and watch the win rate and margin for the first quarter.
Engagement and fees
A Workshop of two to four weeks at $30K to $80K for the cost model, the margin analysis and the new price list. A 90-Day Sprint at $80K to $250K where quoting, sales compensation and systems need to change with it. Every engagement is scoped after a call and confirmed in writing. See consultations and fees.
Where margin hides and where it leaks
Gross margin on the income statement is an average. It blends your best product with your worst, your fastest-paying customer with the one who calls three times a week. Owners look at the average and conclude the business is fine. The average is hiding a few products and customers that make most of the profit and a long tail that consumes it.
The leaks are predictable. Labour burden is understated, so service jobs look more profitable than they are. Overhead is not allocated, so low-price lines look like winners. Small customers get the same terms and the same service as large ones. Discounts are given at the sales desk with nobody counting them.
How pricing works in practice
There are three ways to set a price: from cost plus a margin, from what competitors charge, and from the value the customer gets. Most companies should use all three, in that order. Cost sets the floor. Competitors set the range. Value sets where in the range you land, and it is usually higher than owners assume.
The hard part is not the arithmetic. It is the conversation with customers and the nerve to lose the ones who only bought on price. We write that communication with you, stage the increase so the risk is contained, and track the result weekly so you can see churn, win rate and margin move together.
What you need and what to expect
We need your sales data by product and customer for the last two years, your payroll and job-cost records, and your current price list and quoting method. If job costing does not exist we build a simple version first, because without it the margin numbers are guesses.
Expect to find that some of your best-known products lose money and that a handful of customers are worth more than the rest combined. Expect a price increase to be smaller than you feared and to hold better than you expected. Expect the sales team to push back, which is why the quoting rules and discount limits are part of the work.
- Sales by product and customer, last 24 months
- Payroll by role and job-cost or timesheet data
- Current price list, quote template and discount practice
Industries where we run this most
Questions about this service
How do we raise prices without losing customers?
Raise them in stages, start with new customers and renewals, give notice in writing with a plain reason, and have the sales team ready with the answer. Some customers will leave. They are usually the ones with the lowest margin and the highest cost to serve, and the numbers will show that before you act.
What is the difference between gross margin and contribution margin?
Gross margin is revenue less direct cost of goods or services. Contribution margin also subtracts the variable costs of selling and serving, such as commissions, freight and card fees. Contribution margin is the number to use when ranking products and customers, because it shows what each one actually adds to covering overhead.
Can you help with quoting for custom work?
Yes. For custom jobs, the work is a quoting model that builds the price from estimated hours, materials and a target margin, with a check against actual results on completed jobs. The gap between quoted and actual is where most custom businesses lose money.
Do you set the prices for us?
We build the model, recommend the prices and write the rules. You decide. Pricing is an owner's decision and the model exists so that you make it with the margin visible rather than by feel.
Start with a finance review.
Ninety minutes with Ali on your cash, margin and pricing. You leave with the four numbers to watch and the two or three moves that change them, whether or not we work together.