Pricing review lifts margin at a Bad Homburg lab-supplies maker

Situation

An owner-managed manufacturer of laboratory consumables in Bad Homburg, 55 staff, about €9 million revenue per year. Its line of sample tubes and racks brought in about €2.1 million per year across 14 articles, sold to research labs, contract laboratories, and two distributors. The list price had last changed in 2021. Since then, resin cost had risen by about 28% and energy cost by about 40%. The sales lead argued that customers would walk if prices moved. The owner had no evidence either way.

She wanted an outside view of where the line’s prices sat against the market and what a change would do to volume.

Approach

We ran the lower tier of our pricing and business-model review service: a desk benchmark of one product line with an elasticity view, over five weeks.

Week one: the data. We took 36 months of invoice lines for the 14 articles and rebuilt price, discount, and contribution margin per article and per customer group. The realised price sat on average 11% below list once volume rebates and free freight were counted. Three articles lost money on every order under 500 units.

Weeks two and three: the benchmark. We collected public list prices and published tender awards for six competitors across the same 14 articles. Ten of the firm’s articles sat in the lower third of the price range. Two sat above the median. Two had no close comparison and were priced on the firm’s own cost.

Week four: the elasticity view. We used the firm’s own history. Two earlier price changes, one in 2019 and one in 2021, gave us before-and-after volumes by customer group. Research labs barely moved. The two distributors renegotiated and shifted about 8% of their volume. We modelled three price scenarios against those response rates.

Week five: the written review. Twelve pages, a recommended price list by article, a discount policy with a rebate cap, and the volume and margin effect of each scenario.

Result

In this scenario we recommended an average list-price increase of about 6.5%, staggered from 0% on the two articles already above the median to 12% on the three loss-making small-order articles, with a minimum order quantity of 500 units for those three. We recommended a rebate cap of 8% and an end to free freight under €400.

The model showed a contribution gain of about €95,000 to €130,000 per year against a volume loss of 2% to 3% per year. The owner took the recommendation to the two distributors first, with a twelve-month price hold as the concession, and rolled the new list to the rest of the customer base at the start of the next quarter.

What it cost

€4,900, quoted as a fixed price before the work started. It bought a 36-month price and margin rebuild for 14 articles, a benchmark against six competitors, an elasticity view built from the firm’s own history, and a written recommendation with a new price list and discount policy. The work is covered by our 100% money-back guarantee: full refund on request within 14 days of delivery.

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