Leak 03 · Pricing & Margin - Expired customer-specific pricing
A special price was agreed for a project, a period, or a volume commitment. The project ended and the price stayed. Nobody owns the expiry.
Diagnostic note. Symptoms, required records, an initial check, and possible fixes. This shorter note does not include a full worked example.
What is it?
Customer-specific prices are usually created for a reason with a time limit: a project, a competitive situation, a volume commitment, or an annual agreement. The price record outlives the reason. Years later the customer still buys at a price that was justified by circumstances nobody remembers.
- Family
- Pricing & Margin
- Primary owner
- Pricing Manager
- Secondary owners
- Sales Managers, CFO
- Primary impact
- Gross margin
- Typical data source
- ERP customer price records, contracts, quotes
- Detection difficulty
- 30-day measurability
Ask yourself
Does every customer-specific price in your system have an expiration or review date?
Yes, partially, no, or don’t know. “Don’t know” is the most useful answer, because it points at the test below.
What does it look like?
Warning signs. None of these proves the leak exists. They tell you where to look.
- Customer price records with no end date, or end dates years in the past that are still honored.
- Special prices on items the customer now buys in small quantities.
- Nobody can explain why a particular customer gets a particular price.
What data do I need?
The minimum viable set. Most of it is already in your ERP.
| Field |
|---|
| Customer |
| Item or product group |
| Special price and the price it replaced |
| Start date, end date, and reason code |
| Units sold in the last 12 months |
The initial check
Start with a small sample. Gathering the exports, agreements, or observations is separate from running the check; agree that work with the person who owns the records.
- 1Export all customer-specific price records with their start and end dates.
- 2Count the records with no end date, and the records whose end date has passed but which are still active.
- 3For the ten largest by volume, compare the special price to the price the customer would get under standard rules.
Gap per record = (standard price − special price) × units sold in the last 12 months
Then ask one question: Who agreed each of these prices, and would they agree to them again today?
How much could it be costing us?
A conservative range, not a headline. The goal is a number management can trust enough to investigate.
Σ over expired or undated records of (standard price − special price) × annual units × realistic recovery rate
Common root causes
Fixes fall into three layers. Not every problem needs software, and almost none needs AI first.
- Process
- No review cycle for special pricing, and no owner responsible for renewing or retiring it.
- Data
- Price records lack end dates, reason codes, or a link to the agreement that created them.
- Technology
- The ERP allows open-ended special prices and does not alert anyone when a date passes.
What should we do?
Start with the simplest intervention that could solve it. Move down the list only if the one above is not enough.
Level 1
Visibility
A list of undated and expired special prices, ranked by margin gap times volume.
Level 2
Guardrails
Every new special price requires an end date and a reason code. Expired prices revert unless renewed.
Level 3
Workflow
A renewal queue that lands on the account owner sixty days before each end date with the volume and margin history attached.
Where AI helps
- Reading old quotes, emails, and contracts to reconstruct why a special price exists when the reason code is blank.
Where AI probably doesn’t
Finding undated price records is a database query. Start there.
Before you call it a leak
- Some open-ended prices are deliberate and commercially important. The test finds candidates for review, not prices to raise.
Think this might be happening in your business?
Turn the finding into a next step.
If the numbers say there is something there, send us what you found and we will help you decide whether it is worth a full investigation. No transaction files needed for that conversation.
Related leaks
- Leak 02 · PricingCost increases not reaching customer pricesA supplier raises cost. The customer price stays where it was. Margin on that item quietly compresses until someone notices, often a year later.
- Leak 04 · PricingInconsistent pricing across similar customersTwo customers of the same size, buying the same item in the same quantity, pay prices that differ by 20%. Not by design. By accumulation.
- Leak 05 · PricingPrice overrides without adequate controlsAnyone with order-entry access can change a price, and nothing records why. The override rate is the leak, and it is usually unmeasured.
Let’s start with one thing.
What would better performance look like?
Bring a result you want to improve, a symptom, or a workflow you already understand. You do not need to know the bottleneck yet. We’ll help choose what to investigate first.
No transaction files needed for the first conversation.