Leading global power components manufacturer: Driving margin growth

1 min read

Manufacturing

Sourcing & Commercial Office

Our client, a leading global power components manufacturer, was facing significant annual margin erosion driven by price pressure from large cost-focused customers. We designed and implemented new pricing disciplines, tools and negotiation frameworks to reduce leakage and strengthen commercial control. As a result, the client shifted from $20M in annual concessions to a forecasted $25M+ price gain.

Outcome 1: Reversed $20M in annual price concessions and achieved a projected $25M+ price gain in the following year
Outcome 2: Identified and mitigated critical leakage across both standard and custom products, strengthening pricing discipline
Outcome 3: Enabled commercial teams with new tools and processes, including a ‘courage meter’ negotiation framework still used across the business today

The challenge

The power components industry was facing mounting volatility, with rising material costs, supply chain instability and aggressive pricing tactics from global competitors. Large tier 1 customers had gained leverage, using their scale to demand deeper annual price cuts, while smaller customers were increasingly shopping on cost alone. For manufacturers like our client, this created a dangerous cycle of recurring margin erosion. At the same time, operational complexity and inconsistent pricing behaviors internally made it difficult to defend value. With competitive pressure accelerating and profits at risk, our client needed stronger pricing discipline to regain control of their commercial position.

Our client was experiencing significant year-on-year margin erosion, driven by mounting price pressure from their largest customers and inconsistent pricing decisions across both standard and custom products. Without clear pricing guardrails or a structured negotiation framework, sales teams were repeatedly conceding value to defend key relationships. Pricing leakage had become widespread and unpredictable, and the organization lacked the commercial discipline needed to protect margin. Our client needed a more rigorous and consistent pricing approach to regain control and stop the erosion.

The approach

We initially conducted a deep diagnostic to identify root causes of price leakage across product categories. From there, we introduced disciplined pricing processes designed to reduce unwarranted price variation in standard products and embed guardrails for custom product negotiations. Central to the solution was the ‘courage meter’: a structured tool that categorized customers based on leverage, enabling sales teams to confidently defend price and apply differentiated tactics for tier 1, tier 2 and tier 3 accounts. We also developed a suite of repeatable tools and commercial processes to reinforce long-term pricing discipline across the organization.

The impact

By embedding new pricing processes and equipping teams with practical negotiation tools, the client shifted from reactive price concessions to proactive margin defense. The transformation led to a forecasted $25M+ price gain, reversing a historical trend of $20M in annual concessions. Sales teams now make more consistent, data-backed pricing decisions and continue to use the ‘courage meter’ to navigate complex customer discussions. The company strengthened its position across both large strategic accounts and smaller customers through maximizing margin, stabilizing revenue and building greater internal confidence in pricing strategy.