Case Study Summary
A global contract development and manufacturing organization serving pharma and life sciences customers across the EU and North America engaged Revenue Management Labs to review its pricing approach. The company had grown to roughly $100M in annual sales over several years through both acquisition and organic expansion, but quoting sat with different departments in every business unit, prices were built up from cost rather than the value delivered to customers, and discounting had drifted out of line with industry norms. We assessed the current approach against strategy and best-in-class benchmarks, isolated the actions available immediately, and sequenced the rest into a roadmap. The work identified $3.7M in combined margin and revenue lift and delivered 12x ROI three months after the engagement.
Challenge
There was minimal harmonization in the quoting process across business units. Different departments held responsibility for quoting customers, so the same commercial decision was made differently depending on who made it, and nobody owned the outcome. Pricing itself was built up from cost and devoid of the value the business provided to customers, and costs were not tracked or reviewed routinely, which left little basis for judging whether a given quote was actually profitable.
Discounting compounded the problem. A disjointed discounting strategy was leading to margin erosion, with discount levels misaligned with both industry norms and the company’s own goals. Overrun hours on projects went unbilled, sitting outside every quote the business issued, and multi-year agreements carried no mechanism to recover cost increases over their term.
Growth by acquisition was the root of much of this. Each addition brought its own quoting habits, approval paths, and commercial norms with it, and no common pricing discipline had ever been imposed across them.
Solution
Revenue Management Labs organized the engagement around three phases. We first reviewed the pricing approach in use across each business unit — who quoted, on what basis, and with what authority — and tested it against the company’s stated strategy, its future-state objectives, and industry best-in-class benchmarks. We then isolated the short-term initiatives that could be implemented immediately with minimal organizational investment, and finally defined the medium and long-term initiatives with an implementation plan, financial impact, and the investment each required.
The quick wins needed no new systems. Discounts could be used strategically rather than reflexively, with explicit limits and a sales conversation centered on the value delivered to the customer. Price increase actions could be written into multi-year contracts as standard terms. And prices could be raised on infrequently purchased products and services, where the exposure to volume loss was smallest.
We then sized three specific levers against the company’s own transaction and contract data. Capping discounts at 20 percent, with volume loss and customer pushback factored into the estimate rather than assumed away, carried $2.6M in margin. Introducing contract terms that pass overrun costs through to customers added $0.8M in revenue. A 5 percent increase on multi-year contracts added a further $0.3M in margin while shifting the risk of cost increases off the company’s balance sheet.
Result
Because the quick wins required no new systems and minimal organizational investment, the changes landed quickly: the company achieved 12x ROI three months post-engagement, against $3.7M in identified margin and revenue improvement.
Beyond the immediate financial opportunity, the engagement left the business with a sequenced roadmap for the initiatives that do require investment — harmonized quoting across business units, routine cost review, and a pricing approach built on the value delivered rather than the cost incurred.
