Comercial Passarella: 8% higher contribution margin in auto parts wholesale
The 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.
Comercial Passarella distributes auto parts with a broad catalog, sales through representatives and commercial terms settled order by order — the wholesale format in which margin is decided in the conversation and only shows up in the report weeks later.
This case is about changing the yardstick: the price of each line started to come from a calculation made on net cost, instead of the previous list with a discount on top.
Who Comercial Passarella is
What the customer's website publishes about its operation, and what that demands of whoever sets prices there.
- Broad portfolio of automotive parts
- A catalog in which the daily-turnover line sits alongside the part that sells three times a year. Both need a price, and neither accepts the other's markup — it is the breadth of the catalog that makes it unworkable to decide item by item, by hand.
- Specialized technical and commercial service
- Buyers are repair shops and retailers who quote the same part from more than one distributor before closing. The service is part of what is sold, and it is what justifies the price difference when there is one.
- Negotiated payment terms and loyalty
- Payment term and method enter the negotiation together with price. They are two variables that change the result of the same order, and that rarely appear on the same screen where the discount is granted.
- Data-driven stock and price management
- That is how Passarella itself describes it, and it is the starting point of this case: the pricing decision was already treated as a management decision, not as a last-minute adjustment.
What squeezes margin in a parts distributor
Four wholesale situations that show up before any conversation about commercial strategy.
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 discount granted with no floor on screen
- When the lowest acceptable price for that item is not in sight of the person negotiating, the discount comes out of the feel of whoever is in the conversation. Two similar orders close with different margins on the same day, and the difference only shows up at closing.
- The price list that ages between two purchases
- A list built on the cost of the last receipt stays correct until the next load arrives more expensive. From then on, every order closes at the margin that existed before it — and the whole catalog is wrong together, because there is only one list.
- The payment term that entered the negotiation and not the calculation
- Another thirty days granted at the end of the conversation cost the money for that period. As the cost of the term was not in the closed price, the order that seemed to be at the floor closed below it.
- Contribution margin calculated late
- Knowing an order's margin at month-end close is knowing what can no longer be fixed: the part has gone out, the customer was served, and the next negotiation starts with the same yardstick that produced the previous result.
What changed when price became a rule
The distributor's commercial policy stops being agreed and starts being calculated — which is what the testimonial calls a strategic view of pricing.
This is the method Revema rolls out, in the order it enters the operation.
Price comes from net cost, not from the previous list
Each item receives its acquisition cost with freight, tax collected on entry and supplier rebates already deducted. When cost changes, the suggested price changes with it — across the whole catalog, not only on the items someone reviewed.
The discount gets a floor, and the floor sits where the sale happens
The representative sees how far they can go on that item and that customer. What goes beyond that is escalated to whoever has authority, instead of being granted and discovered later, and each approval is recorded with the reason.
The payment term enters the calculation, not just the conversation
The cost of the term granted becomes part of the order's price. The negotiation still takes place — what changes is that it happens over a number that already accounts for what that term costs.
The order's margin is known before invoicing
The contribution margin of each line is calculated at the moment the order is built. The month-end close stops being the moment the distributor discovers the result and goes back to being the moment it confirms it.
The number that changed
The percentage is the one Passarella's management publishes in its testimonial, over its entire operation — and not over a single item, line or order chosen to make the numbers work out.
8% higher contribution margin
With REVEMA's solution, Passarella gained a far more strategic view of its pricing. It gave us a competitive edge and raised our contribution margin by 8%.
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: distributor
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.
At a distributor the price is not on the tag: it is in the customer's price list, in the discount the sales rep managed to get approved and in the term granted to close the order. The same item goes out at different values on the same day, and that is not a mistake — it is commercial policy at work.
Distributor pricing: price list, discount and margin per order
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 distributor 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.
- ManufacturingAGTechnologiesThe 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.What was measured: 5% higher margin already in the first quarterRead 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
Want to see this calculation in your operation?
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