Most B2B margin is not lost in one dramatic pricing mistake. It is surrendered through a series of reasonable-looking decisions before the work begins.

A discount is approved to secure the quarter. A bespoke reporting requirement is treated as minor. Senior access is promised but not costed. Payment terms stretch from 30 to 60 days. Delivery assumes the client's data, people or decisions will arrive on time. None of these concessions appears decisive in isolation.

Together, they can turn a good sale into weak-margin work.

This is why a growing order book can coexist with flat cash generation, overloaded teams and disappointing profit. The pipeline records what was sold. It rarely records all the value that was given away to win it.

For many SMEs and mid-market firms, the first response should not be a company-wide pricing programme. It should be a disciplined review of ten recent deals.

What the 10-deal review is designed to answer

The review has one purpose: to show whether the business is converting customer value into attractive economic value for itself.

It should answer five leadership questions:

  1. Which types of work create the strongest contribution after the real cost of selling and serving the client?
  2. Where are discounts, extra scope or favourable terms being granted without an explicit exchange?
  3. Which customers consume more scarce capacity than their revenue suggests?
  4. Which deal exceptions are strategically justified, and which have simply become habit?
  5. What rules should change before the next proposal is issued?

The output is not a perfect profitability model. It is a fact base strong enough to improve commercial decisions.

Start with the right ten deals

Do not select only the largest wins. That produces a flattering sample and misses the contrast that makes the review useful.

Choose ten deals from the previous six to twelve months:

  • Two won at or close to the intended price
  • Two won after a material discount or concession
  • Two lost after a serious sales process
  • Two renewals, extensions or repeat purchases
  • Two complex or exception deals that required unusual delivery effort, senior attention or commercial terms

Include a mix of customers, sales owners and offer types where possible. For completed work, use actual delivery and cash data. For live or recently signed work, use the latest credible estimate and mark assumptions clearly.

Ten deals are enough to reveal recurring patterns without turning the exercise into a data project. If every discussion ends with “we need better data”, the review is too broad or the questions are too abstract.

Build the real deal economics

Begin with the headline contract value, then work down to the contribution the deal is expected to produce.

A practical contribution waterfall

For each deal, record:

Headline revenue

Less discounts, rebates and credits

Equals net revenue

Less direct labour at a realistic loaded cost

Less third-party delivery cost

Less expected rework, overruns and change absorbed by the business

Less deal-specific onboarding, support and senior oversight

Less material financing cost or working-capital burden

Equals expected contribution

For completed work, replace expected figures with actuals and calculate the variance.

The objective is not false precision. It is to stop treating all revenue as economically equivalent.

An illustrative example makes the point. A £120,000 contract with a stated gross margin of 45 per cent appears attractive. If it includes £8,000 of unpriced customisation, £6,000 of senior oversight, £5,000 of rework and materially extended payment terms, its economic quality is very different from the original proposal. The arithmetic is illustrative, but the categories should be tested against real records.

Review each deal through six lenses

The financial view shows where leakage exists. The six lenses explain why.

1. Value: was the outcome clear enough to defend the price?

Review the original proposition and proposal.

  • Was the customer's priority specific and economically meaningful?
  • Did the proposal quantify or clearly evidence the value of solving it?
  • Was the offer differentiated, or did it read like a list of activities?
  • Could the buyer explain why this offer was worth the price?

Weak value definition usually reappears later as price pressure. When the commercial case is vague, sales teams compensate with reassurance, customisation and discounts.

2. Price: what was actually realised?

Compare the intended price with the net price after every concession.

Look beyond the visible discount. Include free discovery, waived setup fees, additional users, capped expenses, service credits, rebates and unfunded extras.

Then ask what the business received in return. A concession can be rational when it secures a longer commitment, lower delivery complexity, faster payment, a reference right or access to a strategically valuable segment. A concession with no exchange is simply lost value.

3. Scope: where did ambiguity become free work?

Review the statement of work, assumptions, exclusions and change-control language.

  • Were deliverables defined in terms a client and delivery lead would interpret consistently?
  • Were client responsibilities explicit?
  • Were review cycles, revisions and approval windows limited?
  • Did the contract define what would trigger a change request?

Many service businesses do not have a pricing problem at first. They have a boundary problem. The agreed fee may be reasonable for the intended work but inadequate for the work the team ultimately performs.

4. Cost-to-serve: which demands were not visible in the quote?

Measure the work around the work.

Include onboarding, reporting, meetings, travel, security reviews, integration support, account management, executive escalation, procurement administration and delayed client inputs.

The most important measure may not be total hours. It may be the use of a constrained resource. Ten hours from a specialist who limits delivery capacity can matter more than 30 hours of readily available support.

5. Terms: did the contract protect cash and risk?

Price is only one commercial variable.

Review payment timing, milestone structure, acceptance criteria, liability, termination rights, renewal mechanics, indexation and ownership of third-party cost changes.

A deal with an acceptable accounting margin can still be unattractive if it consumes cash early, pays late and places open-ended obligations on the supplier. Finance should therefore participate before exceptions are committed, not only after invoices become overdue.

6. Governance: who could approve what, and on what evidence?

Examine the decision trail.

  • Who approved discounts and non-standard terms?
  • Was the expected contribution visible at the point of approval?
  • Were strategic exceptions labelled as such?
  • Did incentives reward revenue alone, or the quality of revenue?
  • Was anyone accountable for comparing the sold assumptions with delivery reality?

If exceptions are approved informally, the organisation will learn that the stated rules are optional. A good approval process is fast, evidence-led and proportionate. It should make a sensible deal easier to approve and a weak deal harder to disguise.

Score economic quality and strategic value separately

Leadership teams often defend a weak-margin deal by calling it strategic. Sometimes they are right. The error is allowing the word “strategic” to end the analysis.

Score each deal from one to five on two dimensions:

Economic quality

  • Realised contribution
  • Cash profile
  • Delivery predictability
  • Use of scarce capacity
  • Renewal economics

Strategic value

  • Access to a priority market or customer group
  • Credible follow-on potential
  • Reusable intellectual property or capability
  • Reference or reputation value that the client has agreed to support
  • Fit with the firm's chosen position

The four resulting decisions are straightforward:

  • High economic quality, high strategic value: prioritise and replicate.
  • High economic quality, low strategic value: retain selectively and standardise delivery.
  • Low economic quality, high strategic value: approve as a time-bound investment with a named owner, explicit limit and review date.
  • Low economic quality, low strategic value: reprice, redesign or stop pursuing.

This prevents strategic exceptions from becoming a permanent category of unprofitable work.

Convert findings into four commercial rules

The review only creates value when it changes future decisions. At the end of the session, agree no more than four rules.

1. A price floor

Set the minimum acceptable contribution or net price for standard work. Define who can approve an exception and what evidence is required.

2. A concession exchange

For every material concession, specify what the company must receive in return. Examples include reduced scope, longer commitment, faster payment, standard delivery or a firm reference agreement.

3. A scope boundary

Standardise the assumptions, exclusions, revision limits and change triggers that must appear in proposals for recurring offers.

4. An exception review

Create a short cross-functional review for deals that breach defined thresholds. Commercial, delivery and finance leaders should see the same one-page economics before approval.

Do not respond to the review by creating a large policy manual. The strongest controls are the ones teams can use during a live deal.

Run the review in 30 days

Week 1: select and assemble

Choose the ten deals. Gather proposals, contracts, pricing approvals, delivery hours, third-party costs, invoices, credit notes and payment history.

Week 2: reconstruct

Build the contribution waterfall for each deal. Record assumptions and data gaps without allowing them to halt the exercise.

Week 3: diagnose

Bring commercial, finance and delivery leaders together for a 90-minute review. Identify repeated leakage patterns, not isolated complaints.

Week 4: decide and embed

Agree the four commercial rules, assign owners and update proposal templates, approval thresholds and the leadership dashboard. Review the next five qualifying deals under the new rules.

What the leadership team should track next

Avoid a dashboard crowded with lagging measures. Start with five:

  • Net price realised against target
  • Expected contribution at signature
  • Actual contribution at completion or milestone
  • Value of unpriced scope and concessions
  • Percentage of deals approved outside standard guardrails

Review these by customer segment and offer, not only as a company average. Averages hide the precise places where commercial discipline is strongest and weakest.

Better growth begins with better deal choices

The point of the 10-deal review is not to make sales teams defensive or to refuse every exception. It is to help the business make conscious exchanges.

Some deals should be priced to enter a market. Some clients deserve differentiated service. Some terms are worth accepting to build a strategically important relationship. But those choices should be visible, bounded and owned.

When leadership teams can see the full economics of a deal, the conversation improves. Sales can defend value more confidently. Delivery can protect capacity. Finance can address cash and risk before signature. The CEO can distinguish genuine investment from habitual leakage.

Allington Advisors helps leadership teams strengthen growth strategy, commercial decision-making and the operating disciplines that turn revenue into durable value. If your pipeline is growing faster than profit or cash, a focused review of recent deals can identify where to intervene first.