Case Study
Author: Andy Buteux | 5 minute read
The Opportunity
Retailer driven cost to serve was rising, and price lists ignored it.
Retailers added delivery windows, compliance requirements, penalty structures and accessorial charges over a decade, and manufacturers absorbed all of it because the price list was built when a case cost the same to ship to everyone.
The result is that the most expensive customers to serve are frequently the ones with the best net price, and the most efficient customers subsidise them.
The Approach
TPG led a Bracket Pricing project for a leading food company, rooted in the following steps:
- Assessed order patterns and cost-to-serve by channel and customer, establishing that order behavior, not volume, was the real cost driver.
- Identified strategic channels and aligned supply and demand strategy.
- Designed the pricing brackets and tested via customer impact modeling, giving every affected customer a modeled outcome before any conversation happened.
- Validated internal capability before launch, confirming the order management team could actually administer the brackets. Without this, programs like this tend to get quietly waived within two quarters.
- Deployed the program through the sales organization across all channels rather than as a finance memo. That is why it held.
The Outcome
Launched with broad customer acceptance, and efficient customers rewarded rather than penalized.
$11M Annualized Revenue
$8MM Transport Cost Recovery
