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Commercial ControlSales & Customers

Getting pricing and discounting under control

Create stronger pricing discipline without damaging sensible local judgement or customer relationships.

11 questions answered

Questions answered on this page

01Are we discounting too much?
02How do I stop salespeople giving margin away?
03Why do some salespeople protect margin better than others?
04How do I get branches to follow pricing rules consistently?
05How do I increase prices without losing customers?
06Are supplier price increases being passed on properly?
07How do I know whether our pricing structure still works?
08Should every customer receive the same level of discount?
09Should branch managers have authority to change prices?
10How much pricing freedom should salespeople have?
11Why do margins drop when sales targets become difficult?

Are we discounting too much?

Measure discounting against an agreed reference, then look at the result rather than the number of overrides alone. Compare realised selling prices and margin with the price file, customer terms and previous periods. Separate planned contract pricing from discretionary discounting, and identify which customers, products, branches and salespeople account for most of the variance. High discount does not automatically mean a poor decision if the order produces acceptable profit and fits the service model. The warning signs are repeated exceptions without a clear reason, discounts that continue after a project ends, and lower prices that do not produce worthwhile volume or loyalty. Review the largest patterns first and ask what commercial outcome each concession bought.

How do I stop salespeople giving margin away?

Give salespeople clear information, usable boundaries and consistent management support. They need current costs, an understandable target or floor, and a defined level of authority. Exceptions should require a reason and become visible to the manager, particularly when they repeat. Training should cover how to discuss service, availability, technical help and total basket value, not simply how to defend a list price. Incentives and reviews must also include gross profit, because a pure turnover target encourages volume at any price. Avoid removing all discretion; counter and field teams need room to respond to real market conditions. The goal is to make a deliberate concession visible and accountable, rather than turning every price decision into central administration.

Why do some salespeople protect margin better than others?

Stronger margin performance usually reflects a combination of customer knowledge, confidence, preparation and management expectations. Some salespeople understand which elements of the offer customers value, use alternatives intelligently and know when a price objection is genuine. Others default to discount because it ends the conversation quickly or because they cannot see the effect on profit. Compare like-for-like customer and product groups before judging individuals. Then examine override patterns, order size, lost sales, credits and customer retention. Good practice can often be identified in the language used with customers, the quality of account planning and the willingness to ask for support before conceding. Managers should turn those observable behaviours into coaching and clear standards.

How do I get branches to follow pricing rules consistently?

Create one clear pricing policy with local authority levels that reflect branch roles and customer situations. The rules should state what can be changed, by how much, for which reasons and when an exception needs approval. Keep the process quick enough to work at the counter and sales desk. Use system controls where they support the policy, but do not rely on blocking alone; unexplained workarounds usually appear if the rule does not fit trading reality. Review a small set of meaningful exceptions by branch and discuss them in normal performance meetings. Consistency improves when managers apply the same expectations, data is current and legitimate local judgement is recognised. A policy that is technically strict but routinely bypassed provides little control.

How do I increase prices without losing customers?

Prepare the change at customer and product level rather than applying one message to everyone. Know the cost movement, the value of the service provided and which accounts are most exposed. Correct outliers and unprofitable terms first, then communicate clearly and give sales teams time to handle questions. Avoid apologetic or vague explanations; customers need to understand what is changing and when. Track acceptance, reductions, lost lines and retained margin so that fear does not substitute for evidence. Some negotiation is likely, especially on visible commodity lines, but that does not require conceding across the whole basket. The aim is to recover justified cost and value while making informed exceptions for commercially important relationships.

Are supplier price increases being passed on properly?

Track each significant supplier increase from notification through cost file, selling price and realised transactions. A passed-on increase is not complete because the price file changed; customer agreements, quotes, special prices and manual overrides may still carry the old level. Compare the required increase with realised price movement by affected product group and branch. Give each change an owner, effective date and review point, and identify contracts or customers that need separate action. Also check replacement cost where stock was bought earlier, so current sales do not create a future margin gap. A short post-implementation review will show how much was recovered, where it was delayed and which exceptions remain open.

How do I know whether our pricing structure still works?

A pricing structure is working when it produces explainable, commercially sensible prices with manageable levels of intervention. Warning signs include frequent manual overrides, inconsistent prices for similar customers, excessive special terms, old matrices, unexplained branch variation and margins that move sharply when staff change. Test the structure against representative transactions across core products, customer types and order sizes. Check whether the reference price reflects current cost and market position, whether discount bands still match customer value, and whether staff can explain the result. The aim is not identical pricing. It is a system that gives a credible starting point, supports agreed differentiation and makes exceptions visible enough to manage.

Should every customer receive the same level of discount?

No. Customers differ in volume, product mix, payment behaviour, order pattern, delivery requirement and the value of the relationship. Equal discounts can therefore produce very unequal profitability. Set terms using evidence about the whole account rather than turnover alone. A high-volume customer placing efficient orders and paying promptly may justify different terms from one requiring frequent small deliveries, special stock and extended credit. Keep the logic simple enough for sales teams and customers to understand, and review it when behaviour changes. Fair pricing means applying consistent commercial principles, not giving every account the same percentage. Any difference should be explainable, authorised and supported by the value exchanged.

Should branch managers have authority to change prices?

Branch managers should normally have defined pricing authority because they understand local customers, competition and service conditions. The authority needs boundaries based on margin, value or type of exception, with higher-risk decisions escalated. Give managers current data and make repeated exceptions visible. Review outcomes rather than treating every override as a failure: the important questions are why the change was made, what it secured and whether the account remained worthwhile. Authority without information or follow-up becomes inconsistency; central control without local discretion slows trading and encourages workarounds. A tiered model usually provides the best balance, with clear responsibility at branch, commercial and senior levels.

How much pricing freedom should salespeople have?

Salespeople need enough freedom to trade, but not an unlimited ability to set the business's margin. Define a normal range they can use without approval, based on reliable costs and customer terms. Wider movement should require a recorded reason or manager decision, with tighter control on low-margin products, large contracts and unusual service commitments. Freedom can expand for experienced people who demonstrate sound judgement and can explain their results. It should narrow where data is poor or exceptions become habitual. The system must be quick, transparent and proportionate; otherwise staff will delay customers or find informal routes around it. Pricing freedom should be earned and reviewed through outcomes, not granted as a permanent personal privilege.

Why do margins drop when sales targets become difficult?

When a target looks out of reach, discounting can become the fastest way to bring orders forward or win disputed volume. The risk increases when incentives, daily reports and management conversations focus mainly on turnover. Salespeople then receive a clear signal about which number matters most. Show gross profit value and percentage alongside sales, and review the additional volume needed to recover profit surrendered through a discount. Check whether late-period deals create lasting customer expectations or simply shift demand between months. Managers should challenge the quality of the sale before approving an exception, while recognising genuine strategic opportunities. Balanced targets and consistent conversations reduce the pressure to buy turnover with margin.

What you may be seeing

Price overrides and special terms are common but their reasons are poorly recorded.
Branches quote different prices for similar customers and products.
Supplier increases reach the system but not the final transaction.
Sales targets are met while realised margin continues to weaken.
Managers fear customer loss but have little evidence about price sensitivity.

What good looks like

A well-run pricing system gives staff a credible starting price, current cost information and clear freedom to act within agreed limits. Customer differences are based on understandable commercial reasons, not habit or negotiating persistence. Supplier increases are tracked into realised sales, and important exceptions carry an owner and review date. Managers can see patterns by branch, salesperson, customer and product without slowing every transaction. Sales conversations cover value, availability and service as well as price, while targets balance turnover with gross profit. Local judgement remains part of trading, but the business can distinguish a sound decision from margin given away without a worthwhile return.

What may be happening underneath

Price architecture: Reference prices, matrices and customer terms have aged or no longer reflect cost and market position.
Authority: Staff do not know what discretion they have, or exceptions are neither visible nor reviewed.
Information: Costs, supplier changes and account economics are missing or difficult to use at the point of sale.
Capability: Sales teams rely on discounting because value, alternatives and negotiation are not handled confidently.
Incentives: Targets and reviews place more weight on turnover than realised gross profit and customer quality.

Questions worth asking

01Which customers, products and people account for most discretionary discounting?
02What proportion of supplier increases reaches realised selling prices, and how quickly?
03Can staff explain their authority and the commercial reason for an exception?
04Which special prices have no owner, end date or recent review?
05Do targets and incentives reward profitable sales or turnover regardless of quality?

Where to go next

Turn pricing rules into everyday decisions. The BGC toolkit library contains practical resources for strengthening pricing and margin control. Use the relevant pricing and margin toolkit to turn agreed authority, reviews and management conversations into a consistent working method.

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