AGTechnologies: 5% higher margin in the first quarter with price built from the technical sheet
The engineering-to-order operation that started building price from the product structure, and measured a 5% higher margin already in the first quarter after rollout.
AGTechnologies applies raw material inspection, in-process quality control and in-house engineering to the custom projects it serves. It is the kind of operation where the cost of a unit comes from its technical sheet, and not from a percentage applied to the last sale.
What changed here was where cost comes from: material, process loss and the time of each step started to make up the value of a unit, and margin became a rule applied on top of it.
Who AGTechnologies is
What the customer's website publishes about its operation, and what that demands of whoever sets prices there.
- Rigorous raw material inspection
- Incoming material is checked before it is used. For pricing, this means a unit's cost starts from an identified input, with its own specification — and not from an average purchase value for the month.
- Quality control throughout the process
- What fails control does not become a product sold, and yet it consumed material and time. It is an expected loss, which has to be in the cost of the good unit instead of showing up as a difference at month-end.
- Engineering applied to custom projects
- Each project has its own composition, and none is solved with the previous one's price list. This is where a quote comes out of a new spreadsheet, put together by whoever was available that day.
- Data-driven process optimization
- That is how AGT itself describes it, and it is what makes this case possible: the operation's data already existed, organized, before anyone wanted to turn it into price.
What squeezes margin when cost comes from a project
Four situations faced by those who build price from the product structure, and not from a percentage over the previous sale.
These situations belong to the format of the operation, not to a picture of what the customer did before: what it did is not public, and this page only states what can be checked.
- The unit cost nobody redoes
- A product's composition is put together once, approved, and then copied. Months later, the price still comes from a cost that matches the material and time of when the sheet was written.
- The repriced input that takes time to become price
- Material goes up in January and the new list comes out in April. In between, every product that uses that input was sold at the old margin — and there tend to be more products than you would think.
- The process loss left out of the calculation
- When what was scrapped does not enter the cost of the approved unit, the calculated margin is higher than the margin realized. The difference does not show up on the item: it shows up in the month's result, with no address.
- The special quote made in a hurry
- An off-standard project comes out of a new spreadsheet, with the margin whoever built it judged reasonable. If the customer accepts, that number becomes a reference — and the next similar quote is born from it.
What changed when price started to come from the structure
A unit's cost stops being a number approved in the past — which is what the testimonial calls a transformation of the pricing strategy.
This is the method Revema rolls out, in the order it enters the operation.
Unit cost is calculated, not inherited
Material at today's value, expected process loss and the time of each step make up a unit's cost. It becomes the result of a calculation that runs again whenever any of those lines changes.
A repriced input recalculates everything that uses it
The price change is entered once, and all the products that consume that material recalculate together. What is left for human decision is what started to break the minimum margin, and not a sweep of the entire catalog.
Margin is a rule per line, not a judgment per quote
Each product line has the margin the company decided to practice on it, and the suggested price comes from that rule. Discounts remain possible — what changes is that they become a recorded exception, and not the starting price.
The special quote uses the same calculation as the list
A custom project is priced by its own structure, with the same margin rules that apply to everything else. The quote stops depending on who put it together that day.
The number that changed
It is measured by AGTechnologies' commercial management, in the testimonial the site publishes, and the cut is the quarter following rollout — not a projection for the next twelve months.
5% higher margin already in the first quarter
Implementing the REVEMA solution completely changed our pricing strategy. We raised our margins by 5% in the first quarter, which beat our initial expectations.
The numbers Revema measures in each operation are in results, and the companies that have already left the spreadsheet are in clients.
This case's sector: manufacturing
The case proves what the segment page claims; the segment page shows the whole calculation, with the sector's inputs and a worked example with numbers.
In manufacturing, cost does not come through the door: it is assembled. Each product has a bill of materials with raw material, packaging, machine time and labor, and each of those lines changes at its own pace — resin with the exchange rate, energy with the tariff flag, the labor hour with the collective agreement.
Manufacturing pricing: bill of materials, factory cost and channel
Further reading
The blog covers the same subjects with the math up front: the cost that goes into the price, the margin that is left and what changes when the rule starts being calculated.
Who does this calculation every day
None of what is written above is hard to calculate once. What is hard is redoing the calculation on every item whenever a cost changes — and that is when the price goes back to being inherited from the previous month with an adjustment on top.
RevPrice does that work in a manufacturing operation: it recalculates markup, contribution margin and break-even point with every invoice entry, shows the effect of a discount before it is granted and warns when an item starts selling below the floor.
The other cases
People looking for their own sector often end up at the neighboring sector's case. These are the other published cases, each with its operation and its number.
- DistributorComercial PassarellaThe auto parts distributor that started closing orders knowing the margin each one leaves, and measured an 8% higher contribution margin after replacing the price list with the rule.What was measured: 8% higher contribution marginRead the case
- RetailBW RacerThe ergonomic furniture catalog that swapped a single markup for a margin rule per line, with the price calculated before the proposal reaches the customer.Read the case
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