Almost every new account asks for a better price than they pay today. The rep wants to close. The owner wants to protect margin. The way through is to decide in advance what you will and will not give, and to structure anything you do give so that it still makes sense after the first few months.

Start with your floor

Before any conversation with a prospect, know the lowest price you will accept for each item or category. That floor should cover:

  • Product cost, meaning what it will cost to replace the stock, freight included (landed cost), not last month's cheaper buy.
  • The cost to serve this customer: delivery frequency, drop size, distance, payment terms, returns, and any special handling such as case breaks or custom cuts.
  • A minimum gross margin that you have set as a business, by category.

Be careful with the arithmetic, because margin and markup are not the same. As a hypothetical example: if a case costs $20.00 and you want a 20 percent gross margin, the price is $20.00 divided by 0.80, or $25.00. Adding 20 percent to cost gives $24.00, which is only about a 16.7 percent margin. The markup and margin calculator does this for you.

Why a big introductory discount backfires

An offer like "a large discount for the first few months, then regular pricing" sounds simple. In practice it tends to go wrong in predictable ways:

  • The customer anchors on the discounted price. When it ends, it feels like a price increase, and they start shopping around again.
  • The rep gets credit for the win, while the step back up to regular pricing becomes someone else's problem months later.
  • You learn little about whether the customer values your service, because the price is what brought them in.

An account that stays only while you are the cheapest will leave the moment someone else is, and while it stays it pays the least toward your costs.

Lead with what you do well

Most buyers care about more than price: deliveries that arrive when promised, complete orders, product in good condition, easy ordering, and quick credits when something goes wrong. If you are good at these, say so, and back it with your own records. Before you meet a prospect, pull together:

  • Your fill rate and on-time delivery record for the last few months.
  • Items you carry that the prospect has trouble finding elsewhere.
  • Your delivery days, order cut-off times and the ways customers can place orders.
  • How you handle a short or damaged case, and how fast the credit is issued.

Only claim what your operation actually delivers. A promise you miss in the second week costs more than the discount you avoided.

If you do discount, structure it

Some accounts will still need a price concession. A few ways to give one that holds up over time:

  • Tie price to volume. Set tiers by monthly purchases, so a lower price is earned by the volume that makes it affordable. As a hypothetical example, a customer buying under $5,000 a month pays your standard price, one buying $15,000 or more gets a small discount, and one buying $40,000 or more gets a slightly larger one. Review tier placement on a schedule, so a customer whose volume falls moves to the matching tier by agreement rather than by surprise.
  • Discount a few items, not the whole order. A sharp price on the handful of items the buyer compares most closely (their usual fryer oil, a staple protein) can win the account while the rest of the order carries normal margin. Check that the order as a whole still clears your floor.
  • Use a rebate instead of a lower price. A rebate paid after the period ends, on what was actually delivered, rewards real purchasing and keeps your invoice price intact.
  • Tie it to payment. Make the better tier conditional on paying within terms. A customer who pays late is using money the discount assumed you would have.
  • Put an end date in writing for anything introductory, and remind the customer before it ends.

Charging competing customers different prices for the same goods can raise legal questions under U.S. price-discrimination law. Have your attorney review a tier or rebate program before you roll it out.

Make the rules visible to reps

Pricing discipline breaks down when each rep negotiates from memory. Give reps the floor, the tiers and the approval path in writing, and let them see the margin on each line while they build the order. A price below the floor should need someone else's approval, and those exceptions should be reviewed every month. If one rep's exceptions are far more frequent than everyone else's, that is a coaching conversation, not a pricing policy.

What to track for new accounts

Look at new customers as a group, by the month they started, and follow each group over time:

  • Retention at 6 and 12 months: how many are still ordering?
  • Gross margin per account through the first year: is it rising as introductory pricing ends, or stuck where it started?
  • Order frequency and drop size: are they settling into a regular pattern you can route efficiently?
  • Days to pay: are they paying within terms?
  • How the account was won: note whether price or service closed the deal, then compare how each group looks after a year.

That last comparison is the most useful one. It tells you, with your own data, whether discounting to win accounts pays off in your business. Our article on per-customer profitability covers how to work out which accounts actually make you money once delivery and collection costs are counted.

How APFoodz handles it

In APFoodz, customer pricing and deals are set once and used everywhere, and the order builder shows the customer's price, stock and margin on every line.