Nobody cut the price and the margin still fell

Revenue grew, every job was priced at least as well as last year, and the blended margin still dropped five points. The culprit is rarely price.

By Steve 5 min read
Abstract bridge artwork for Nobody cut the price and the margin still fell

A familiar scene in a management meeting: revenue is up, the sales team is defensible, no one has authorised a discount they can remember, and the blended gross margin has fallen. The finance lead is asked to explain it. The sales lead is asked whether the team has been giving ground on price. Both leave the room slightly annoyed, because both are right, the discounting story doesn’t hold, and the margin decline is real. What has usually happened is that the mix has moved. Nobody decided it should. Mix drift…

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