We are experiencing high inflation and rising supply chain costs. What weekly pricing or margin metrics should we track on our Scorecard to ensure our sales reps are not discounting our services and eroding our profitability before our monthly P&L is run?

Question

Tyler Smith · Accepted Answer

Waiting for your monthly profit and loss statement to spot margin erosion is a dangerous strategy when costs are rising rapidly. By the time you see the monthly reports, weeks of unprofitable sales have already occurred. You must track pricing and margin leading indicators on your weekly Scorecard.

First, track your gross margin at contract signing. Rather than waiting for the job to close, calculate the estimated gross margin based on the current cost of goods sold the moment the contract is signed by the client.

Second, track the average discount percentage granted by your sales team. Set a hard limit and measure how often reps are dipping below target pricing to close deals.

Third, track key vendor cost adjustments. If your major supply chain costs fluctuate, place a leading cost index on your Scorecard to alert you when vendor price changes must trigger an immediate adjustment to your client-facing pricing.

The sales and purchasing seats on your Accountability Chart must own these metrics. Reviewing these weekly in your Level 10 Meeting allows you to react immediately to inflation, adjust your pricing dynamic, and protect your margins before they hit your bottom line.