Nobody searches for this, and it is the most valuable calculator on the site. When prices live in someone's head or a spreadsheet, what a customer is charged depends on who answered the phone and what they remembered — and a supplier rise reaches the customer weeks after it reached you. This puts a figure on both, in pounds and in points of margin.
Across ten thousand product lines, no salesperson can hold the prices. So what a customer is charged depends on who picked up the phone, what they remembered, and how badly they wanted to close — and when a supplier puts prices up, the rise reaches the customer weeks after it reached you. Neither shows on a timesheet. Both come straight off the bottom line. This is the number.
Two leaks, separately, because they have different causes and the same fix. The first is underpricing. Take the revenue you win, the share of it that was priced from memory or a spreadsheet rather than from one central book, the share of those quotes that came in under the right price, and how far under they typically were. Multiply through and that is profit you never invoiced. Nobody notices it because the job still looked profitable — it was just less profitable than the same job quoted by the salesperson who remembered.
The second is lag. When a supplier rises, there is a period between the rise reaching the business and the rise reaching every quote — the time it takes to update the spreadsheet, reprint the list, tell everyone, and for everyone to actually use it. During those weeks every quote is priced at the old cost and won at the old margin. Rises a year times weeks of lag is the number of weeks a year you are quoting at stale costs; times the size of the rise, on the revenue you win, is the leak.
The tool then expresses the total as points of margin, because that is the unit that makes it real: a business at 5% margin losing 2.75 points to pricing is not a business with a pricing problem, it is a business whose pricing problem is most of its profit.
In the wholesale nursery the unlock was not software. It was advice: put every product line on the website, with its price. Once the whole catalogue existed in one place and was priced, it stopped being a shop window and became the rule the quoting system follows. A salesperson could not underprice, because the number came from the catalogue and not from a judgement made under pressure with a customer waiting. A supplier rise reached every quote the moment it reached the website, instead of waiting to reach every salesperson's memory.
That is where the margin moved. One price list applied the same way by everyone is the difference between 5% and 17.6% far more than any single price rise is — and the same is true in the fencing business, where 57 items and 29 rules replaced a printed list in each van.
2,730 quotes a year, a 25% win rate and a £1,500 average: £1,023,750 won, with £204,750 of gross profit at 20%. Every quote memory-priced, one in five under by 8%: £204,750 of revenue underpriced, and £16,380 of profit gone. Two supplier rises of 5%, each six weeks reaching every quote: twelve weeks a year at stale costs, £11,812. Total about £28,200 — 13.8% of gross profit, 2.75 points of margin.
Audit fifty recent quotes against what the price book says they should have been. It takes an afternoon and it replaces the two estimates in this tool with facts — and it is almost always worse than the owner expects. Then put every price in one place that every quoter quotes from, so a rise entered once reaches every quote from that moment. That is the first thing the operations audit looks at in any business that quotes, and the other calculators cover the hours and the hire beside it. The short version of the method is on the byHoratio homepage.
Profit that is earned in principle and never invoiced in practice. In pricing it comes from two places: quotes that come in under the right price because they were priced from memory or an out-of-date spreadsheet, and quotes issued at old costs during the weeks between a supplier rise reaching the business and reaching every quote. Both come straight off the bottom line, which is why the tool expresses the total as points of margin rather than only pounds.
Audit a sample. Pull fifty recent quotes and check each line against what your price book or current supplier costs say it should have been. Count the ones that were under and average how far under. Fifty is usually enough to settle it, and the result replaces the two estimates in the calculator with your own figures. Most owners find the share is higher than they guessed and the shortfall is smaller — which still adds up.
Because the rise has to travel from the supplier's email to your spreadsheet, from the spreadsheet to a printed list or a message to the team, and from there into each salesperson's habit. Every quote issued in that window is at the old cost. With one central price book the rise is entered once and every quote from that moment follows — the lag becomes zero and the leak with it.
Less, but not nothing. One person quoting from memory is consistent with themselves, so the underpricing leak is smaller — but the lag leak is the same, and the moment you hire a second quoter the underpricing leak appears in full. The nursery in case study 004 had three salespeople and ten thousand lines; nobody could hold that.
It is the figure that business reached over two years, from a near-break-even 5 per cent, with the office unchanged at three people. Pricing consistency was the largest single contributor, but not the only one — the same period rebuilt quoting, order management and dispatch. Treat it as what one business did rather than a benchmark.
If the answer depends on who picked up the phone, that is the leak. One price book, applied by everyone, closes it. Twenty minutes, no deck, no pitch.
HORATIO@BYHORATIO.COM
The nursery where one price book moved margin from 5% to 17.6%.
The take-off is easy; the price book behind it is the product.
The hire, the charge-out rate, the supplier ceiling, and more.