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Arkon GroupModule perspective

Pricing Excellence: Four Levers, Held to Policy, That Decide Your Margin

Margin in B2B is decided less by list price than by four disciplines (pricing what makes you hard to replace, one discount policy, charging for the extras, and a clause that passes cost through), each of which can be checked.

Arkon Group perspective · updated 10 October 2026

Most mid-market B2B companies treat pricing as an annual list-price exercise and a series of deal-by-deal negotiations. Our view is that margin is made or lost in four places that sit around the list: whether you charge more where you are hard to replace, whether discounts follow a policy or a person, whether the extra work customers ask for is billed, and whether your contracts let cost changes reach the price. The four levers are the same in an engineered-to-order equipment business, a consulting or managed-services firm, and a software company. Only the names change. Each has a visible sign that it is working, and each has a trap that makes a result look like a pricing win when it is not.

Framework

The same four levers run across industrial, services and software businesses

The vocabulary differs by business model, but the logic does not. A company that pulls all four, written down and applied consistently, is pricing well. A company that relies on negotiation skill alone is not.

  • Price on what makes you hard to replace: being designed into a customer's product or plant, a specialist grade or skill few can supply, high-stakes advisory work, or software customers run deeply on.
  • One discount policy: limits set by customer size, deal size or client group, with every exception justified by a fact about the account.
  • Charge for what goes beyond the standard: express and small orders, custom grades, engineering changes, project variations, scope added after signing, paid onboarding, premium support, conversion fees.
  • A clause that moves price with cost: a steel or raw-material formula, a pay index for service rates, or a yearly rise written into every software contract.

Trend

Charge more where switching is hard, and compete where it is easy

The first lever separates work where you hold a position from work a customer can easily take elsewhere. In equipment, components and process materials, that is designed-in business versus comparable quotes. In consulting, managed services and staffing, it is high-stakes work or scarce skills versus capacity work. In software, it is depth of use. Pricing both the same way leaves money on the protected work and loses deals on the exposed work.

  • Good looks like this: the margin or realised-rate spread between protected and comparable work widening, while the win rate on comparable quotes or competed deals rises.
  • In software, good looks like each package being bought for one reason a customer can name, with revenue per customer rising where use is deep.
  • Watch: if comparable quotes are lost on lead time, capability, features or the team offered rather than on price, the problem is sales or product. A price move will not fix it, and any later win-rate gain should not be credited to pricing.

Trend

Discounts should follow a policy, not the account owner

Wide discount dispersion is usually a sign of a negotiation culture rather than a deliberate one. The aim is one policy, with limits by customer size in product businesses, by deal size in software, and by client group in services, and a reason on file for every exception.

  • Good looks like this: net price against list, or realised rate against the rate card, falling in a narrow band within each tier.
  • Every outlier is explained by a named account attribute such as volume, strategic fit or contract length, never by which salesperson or partner owns the account. Write-offs carry a named reason.
  • Watch: where one customer or client dominates revenue, the limits cannot be enforced against them. The policy then applies to the rest of the book, which is still where most of the leakage usually sits.

Trend

Bill what customers ask for beyond the standard, and publish the charges

Small runs, expedites, engineering changes, project variations and late scope all cost money to deliver. When they are absorbed, the most demanding customers are quietly subsidised by the rest. The fix is a published schedule of charges applied when the event happens, not a fee negotiated afterwards.

  • Good looks like this in product businesses: the share of order lines below the economic lot size falling because customers consolidate orders, not because accounts are lost.
  • In projects and services: overrun on fixed-price work billed through change orders, short-notice requests priced, and write-offs falling. In software: onboarding paid on most new contracts, a share of customers on premium support, and no fall in the win rate.
  • Watch: if spares and short runs are bound into an original programme award, the charges wait for its renewal. If competitors offer free onboarding in a price war, move the fee into the package price. If overruns come from under-estimated proposals, the fix is estimating, not billing.

Trend

Write cost pass-through into the contract before you need it

Steel, raw materials and pay all move, and a price with no mechanism tied to them erodes margin with every cycle. The clause should be named in the contract, state its trigger and its lag, and apply without reopening the negotiation.

  • Good looks like this in materials-exposed businesses: most contracted volume on a named mechanism whose lag is shorter than the metal cycle, with adjustments landing within one cycle of the trigger.
  • In services: every agreement longer than a year tied to a named index, with rates adjusted within a quarter of it moving. In software: every contract carrying a yearly rise, applied on the anniversary without discussion and with churn unchanged.
  • Watch: in a falling market the clause passes decreases on too. It protects margin in both directions and is not a price rise. Dominant customers may impose their own give-back schedule, public clients may write their own index into tenders, and customers on multi-year fixed prices wait for renewal.

So what

Judge a pricing result by its cause, not by the headline

The common failure is not choosing the wrong lever. It is reading the result wrongly. A higher win rate can come from better lead times. Lower dispersion can come from losing difficult accounts. A margin gain can be a cost pass-through that reverses when the market turns. A credible pricing programme ties each lever to its own signal and checks that the signal moved for the right reason.

  • Measure each lever separately: spread and win rate, dispersion within each tier, billed events and write-offs, and clause coverage and lag.
  • Treat a dominant customer as a separate case, so their terms do not set the rule for everyone else.
  • Fix pricing only where pricing is the problem. Estimating, capability, delivery and product gaps need their own remedies.

How Arkon helps

Turn pricing from negotiation into policy you can check

Pricing Excellence applies these four levers to your business model: where you are hard to replace and should charge for it, discount limits your sales team can work within, a schedule of charges for non-standard work, and the right pass-through clause for your contracts. It sets the signal that shows whether each lever is working and flags when a result belongs to something other than price. It is kept current monthly, so your policy keeps pace with your costs, your contracts and your customers.