Revenue is up and margin is not. How we would find which lines, customers, and channels actually make money, and price to that.
For
Companies growing in volume faster than in profit
Practice
Growth Strategy
Starts with
Diagnose
Measured by
Margin by line, not revenue in total
What it should change.
Leadership can see, line by line, where the money actually is. Pricing, discounting, and sales effort move toward the lines that earn, and the forecast is built from margin rather than volume.
01The problem
The top line is the number everyone watches, so it is the number everyone grows. Discounts are given to win volume. The largest product line turns out to be the thinnest, and nobody has set the two numbers side by side.
Margin, not volume
Discounts nobody can total
Sales rewarded for revenue, whatever it earns
02What we would look at first
Revenue beside margin for every line, customer group, and channel, from your own books. Then how prices are actually set, and who can change them. The pattern is usually visible early.
03What we would change
Not everything. Usually two or three prices, one discount rule, and what the sales team is rewarded for. Each change comes with what it should be worth and how we would know.
A price list that reflects what each line earns
One rule for discounts, and who may break it
A forecast leadership believes
04How it runs afterwards
Margin by line becomes a standing report. Prices are reviewed on a schedule rather than in a crisis.
Where it goes wrong
The part that usually goes wrong.
Every engagement has a part that fights back. This is the one we would plan for first.
Raising everything at once. An across-the-board increase loses the customers you wanted to keep. We would move the few prices the numbers support, watch what happens, and then decide on the rest.