Case Study — Anonymized
Rebuilding the margin floor at a $650M CDMO.
Nutraceuticals and effervescent formats. Private-equity backed, growth phase, operations across seven countries. Accelerating margin compression on the largest strategic account — and an ERP that could not tell anyone why.
The challenge
The account was compressing from three directions at once. Raw material costs were rising. The contract was in renegotiation. And supply chain financing terms — extended to secure the relationship in the first place — were being absorbed into margin rather than priced into the contract.
None of that was visible in the reporting. Native ERP output could not isolate true product-level cost or margin. Commercial leadership was making pricing decisions on a $32M account without reliable data underneath them, and every renegotiation started from a position of not knowing the floor.
You cannot hold a price you cannot defend. And you cannot defend a price you cannot derive.
The framework
Cedar Faire's principal designed and built a SKU-level, EBITDA-based volume-break pricing model establishing a defensible gross margin floor across volume commitment tiers — with supply chain financing costs fully burdened into price rather than silently absorbed.
That model sat on top of a revenue and margin intelligence system constructed directly against ERP transaction data, giving commercial leadership line-level cost and profitability visibility for the first time. The framework was presented directly to, and adopted in ongoing partnership with, the Chief Commercial Officer and Senior Director of Sales.
Continue reading
The results, the mechanics, and the replication path.
The remainder of this case study covers the measured outcomes, how the volume-break tiers were constructed, what broke during implementation, and what it takes to replicate the framework in a different ERP environment. Enter a work email to continue and receive the one-page PDF.
The result
| Measure | Outcome |
|---|---|
| Largest strategic account — revenue | $32M → $37M |
| Largest strategic account — gross margin | 26% → 36.2% |
| Estimated annual recurring gross profit impact | ~$5.1M |
| Second portfolio, same framework — gross margin | 9% → 23% |
| Second portfolio — revenue | $11M → $13M |
What actually made it work
1. The floor was derived, not asserted
Volume-break tiers were constructed from an EBITDA target rather than a gross margin convention. That distinction matters in negotiation: a customer can argue with a margin percentage that looks like a preference. It is far harder to argue with a floor that is visibly tied to the cost of serving them, including the financing terms they asked for.
2. Financing terms were priced, not absorbed
Extended payment terms are a real cost of capital, and in most manufacturers they disappear into the gap between the commercial conversation and the finance function. Burdening them explicitly into the tier structure recovered a meaningful share of the total improvement — and changed how the next set of terms was negotiated.
3. The cost layer was built against transactions, not summaries
The intelligence layer joined live to standard cost, last price paid, and receipt history — not to a monthly roll-up. That is why the output could survive a customer challenging a specific line item, and why it held up when raw material conditions moved mid-contract.
4. Commercial leadership co-owned it
The framework was presented to and adopted with the CCO and Senior Director of Sales. A pricing model the sales organization did not help shape gets quietly ignored the first time a quarter looks tight. This one was requested for reuse on subsequent deals — which is the strongest adoption signal available.
What broke, and what that cost
Standard costs were stale in ways the organization had normalized. Overhead absorption logic was defensible on paper and misleading in practice. Some cost elements had no governed place to live at all, which meant scenario planning was happening in unversioned spreadsheets on individual laptops. Roughly a third of the build was cost architecture work that nobody had scoped as pricing work, because it had never been visible as a pricing problem.
That is the pattern worth taking away: a pricing engagement at a manufacturer is usually a cost architecture engagement in disguise. Any advisor who quotes a pricing build without first testing the cost data is quoting a number they will not hold.
Replicating this
The framework is ERP-agnostic in principle and ERP-specific in execution. The build referenced here ran on Sage X3; the same architecture has direct analogues in Epicor, NetSuite, Infor, and D365. What actually determines feasibility is not the ERP brand — it is whether transaction-level cost data is retrievable, whether the chart of accounts supports cost center attribution, and whether someone at the executive table will own the price decision once the floor exists.
Those three questions are exactly what the Margin Diagnostic answers, in two to three weeks, for a fixed fee.
Different company, same three questions.
Is the cost data retrievable, does the chart of accounts support attribution, and will someone own the price decision? Thirty minutes is usually enough to find out.