Editorial note: This article is a fictional reconstruction of situations businesses may face. Its purpose is to inform and raise awareness about possible risks and responses. People, events, data and outcomes should not be interpreted as actual cases, verified facts or results achieved by LC. Each organization needs its own assessment.
Tomas closes his distributor's best sales quarter, but the bank balance tells another story. The team calculates contribution margin: revenue from each sale minus the variable costs required to deliver it. That number does not explain the whole business, but it shows which sales contribute and which consume capacity without enough value.
The discount was not the only concession
In a sample of orders, Tomas adds urgent transport, special packaging and installation hours. Some customers receive low prices and extra service that was never budgeted. Separating product, customer and delivery type keeps an overall average from hiding the issue. Before changing prices, he checks that costs are complete.
Review the promise with the price
The team compares three options for one segment: current price with a limited scope, adjusted price with full service, or a more efficient delivery method. They ask customers which part they value. Raising price without reviewing the promise may lose sales; keeping it without controlling exceptions may lose margin.
A decision by segment
Over the next month Tomas records estimated and actual margin by order type, alongside sales objections. The test does not assume every customer must pay the same. It looks for a sustainable offer for each need and a clear discount approval rule. More sales help only if operations can deliver and collect economically.
Measure the cost of fulfilling the promise before calling a sale profitable.
BRING IT TO YOUR BUSINESS
Three questions to get started.
- Which extras do we provide without charging?
- What margin does each order type leave?
- Who approves a discount and on what basis?
Does this sound like a challenge in your business? We can start with a conversation.
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