Why Your Pricing is Leaking Profit

The Dangerous Illusion of the ‘Average Cost’

In a transport business where every penny counts. Relying on average cost metrics like “Cost per Shipment” or “Cost per Kg” is no longer a sustainable business practice. These high-level averages create a false sense of security, failing to reflect the specificity and complexity of your operations. Additonally, this can be the difference between making or losing money on each delivery.

If your finance team reports an average cost of €10 per parcel. Your leadership team may assume all sales at €11 are profitable. This simple assumption is a costly illusion.

The Reality: Cost Variability is a Goldmine (or a Trap)

The core problem is cost variability. Average costs mask the significant differences in operating expenses driven by customer behavior, service levels, and network design.

Consider this real-world example: A carrier working with an average cost of 10 found that the actual cost per parcel was varying wildly in the range of 4 – 50.

  • The Trap: Selling a high-cost service for €11 based on a €10 average leads to significant, unforecasted losses, or “hidden costs”.
  • The Goldmine: Over-pricing a low-cost service to maintain your margin means you leave significant profits on the table (by missing opportunities to fill your remaining capacity). It also opens the door to low-cost competitors.

The Power of De-Averaging: Winning the Competitive Race

The parcel market is highly competitive and is focused on profitable growth. When you de-average your costs and achieve granular visibility, you unlock two massive competitive advantages:

  1. Smarter Commercial Decisions: You uncover customers with hidden profitability (lower costs than average) and those with hidden costs (simply not profitable). This immediately informs your General Rate Increase (GRI) campaign, allowing you to focus on adjusting targets for unprofitable clients.
  2. Surgical Pricing Accuracy: You can now accurately calculate your walk-away prices for different customer and service profiles. This allows you to price more aggressively to win price-sensitive deals you would normally lose, or to refrain from providing an unnecessary discount when you know your cost base is high.

The Financial Mandate for Change

Our research shows that a 1% improvement in the accuracy of your cost predictions on new business can lead to capturing an additional 2% in margin due to better win rates. This is the massive, measurable return on investment for C-Levels who commit to modernizing their cost models.

The time to act is now.  Don’t let old systems dictate your future. The market has changed. The complexity of modern logistics demands a modern cost model. It’s time to move beyond the average. Start identifying the true costs—and profits—of every single shipment. With Open Pricer, carriers worldwide are enforcing discipline, automating governance, and unlocking profitability.

Book your strategy session with Open Pricer today.

Learn more on our latest pricing insights:

Read Pricing mistakes that make carriers lose margins Part 1

Read From cost cutting to value creation : How pricing systems protect carriers’ margins