Raising prices is the fastest lever on margin and the one with the most political weight attached to it, so it tends to be either the first idea in the room or the forbidden one. Meanwhile the margin after the goods moves on four other things entirely: what you pay, what arrives saleable, what your customers actually buy, and how honest your cost data is. This post is those levers, in order of how quickly they pay, with the arithmetic for each. On a store doing €60.000 of net revenue a month, one point of CM1 is €600 a month, so none of this is a rounding exercise.
- Cost data first: a catalogue with unpriced or stale costs reports a CM1 that is flattered rather than earned, and every decision below rests on it.
- Landed cost, not invoice cost: freight, duty, currency and shrinkage add close to a fifth on ordinary import figures.
- Mix beats price: shifting the same volume toward better-earning products raises CM1 with no customer noticing anything.
- Supplier terms move on evidence, not on charm: a dated quote history is the cheapest negotiating tool available.
Fix the cost data before believing any of it
A product with no recorded cost subtracts nothing and reports a perfect margin, so the worse the data, the better the catalogue looks. That is the first thing to fix, and it is usually a short job: unpriced costs concentrate in a handful of newer or seasonal products rather than spreading evenly. Until it is done, every ranking below is sorted partly by data quality.
Stale costs are the quieter version. Supplier prices creep one reorder at a time, and a cost captured eighteen months ago flatters today's margin by the entire drift. The test is quick: pick your five biggest sellers and compare their recorded cost against the last invoice you actually paid.
Price the goods at what they really cost
The invoice price is not the cost. Freight, insurance, duty on the customs value, currency conversion and the units that arrive damaged all belong in it, and on ordinary import figures they add close to a fifth. A landed cost of €19,15 against a €16,00 invoice is the difference between a reported 61% margin and a real 53%, which is enough to make a product look worth advertising when it is not.
This lever does not raise CM1 by a cent on its own. It moves the number to the truth, which is what makes every following decision correct rather than confident.
Move the mix rather than the prices
Two products at the same price can leave very different amounts, and customers are indifferent to which one a homepage promotes. Rank the catalogue by contribution rather than by revenue, which is the exercise in which products actually make money, then move the merchandising toward the top of that list: homepage placement, bundles, the default variant, the recommendation slots, the ad budget.
The arithmetic is unglamorous and large. Moving a tenth of your volume from a 45% product to a 60% one raises CM1 by 1,5 points with no price change and no cost negotiation, and the work is a merchandising afternoon rather than a supplier conversation.
| Lever | Typical effect on CM1 | Time to pay |
|---|---|---|
| Fix missing and stale costs | corrects the number, up or down | days |
| Use landed cost | corrects it downward, honestly | days |
| Shift the product mix | 1 to 3 points | weeks |
| Renegotiate on volume evidence | 2 to 5 points on the lines it touches | a quarter |
| Cut shrinkage and returns write-downs | under a point, and compounding | a quarter |
Negotiate with a file rather than a feeling
Suppliers respond to volume, predictability and evidence. A supplier price tracker, one dated row per quote with the quantity each price assumed and the lead time it promised, turns a vague request for a better price into a specific conversation about a specific line. It also catches the drift that prompted the conversation in the first place.
Two asks cost the supplier less than a discount and are worth nearly as much: a shorter lead time, which lets you hold less safety stock, and a smaller minimum order, which frees cash. Both improve your position without touching their unit price, which is often what makes them possible.
Stop losing units you already paid for
Shrinkage, damage in transit and returns that come back unsaleable are all cost of goods that produced no revenue. Individually they look like rounding; priced at landed cost across a catalogue they are usually worth a point of margin on their own, and they are entirely inside your control.
The counting is the intervention. A rolling monthly count of the fastest twenty products finds the problem while it is small, and pricing each variance in money rather than in units is what makes anybody act on it.
The week-one version
- List every product with no recorded cost. That list is the finding; price it from the last invoice you actually paid.
- Recompute your top five sellers at landed cost, including freight, duty and shrinkage, and see which margins move.
- Rank the catalogue by total contribution rather than by revenue, and compare it with what your homepage currently promotes.
- Start a quote log today, even with one row. In six months it is the most useful negotiating document you own.
- Count your fastest twenty products and price the variance. If it is more than a rounding error, count monthly from now on.
Where prices come back into it
None of this argues against raising prices, which remains the strongest lever available: almost every cent of an increase flows to contribution because the goods and the parcel do not move with it, and a markup and margin calculator will price the change in a minute. The argument is about order. Work the five levers above first, and if a price rise is still needed, it lands on a catalogue whose costs are known and whose mix is already pointed at the products worth selling, which makes the increase smaller than it would otherwise have to be.