The Price Nobody Reset

A category manager found $290 of margin quietly leaking out of one dishwasher. Then she found forty more.

It started with a customer email. A shopper had found the same premium 60cm dishwasher $312 cheaper down the road and wanted a price match. Routine stuff. The category manager at a mid-size appliance retailer pulled up the product to approve it, and something didn't add up. The competitor wasn't running a sale. This was just their shelf price, and it had been sitting there, roughly $300 below hers, for a while.

She checked how long. The competitor's price had drifted down in three steps over about seven months. Hers hadn't moved once.

Here's what made her stomach drop. Her price wasn't wrong the way you'd assume. No fat-fingered typo, no broken feed. The number was doing exactly what it was told. Two years earlier someone had set it as landed cost plus 38%, keyed it in, and moved on. The markup was fine. The cost was fine. But the market underneath that number had quietly walked off in the other direction, and the price had no way of knowing.

She'd been the cheapest in the country on that dishwasher for months without realising it. And being cheapest by $300 hadn't won her a single extra unit that being cheapest by $10 wouldn't have. She'd handed roughly $290 of margin to every buyer who was going to purchase anyway. On a product moving four or five a week, that's real money set on fire, slowly, with no smoke.

So she pulled the thread.

One becomes forty

She exported her top 200 lines and started spot-checking them against live competitor pricing by hand. Took a full afternoon and it was miserable, but the pattern was undeniable. The dishwasher wasn't a freak. It was just the one a customer happened to notice.

About a dozen products were like it, priced well under the street and leaking margin on every sale. One was worse: a flagship stand mixer with an RRP in the $800s, drifted down to the low $500s off an old cost basis nobody had revisited, sitting hundreds of dollars under where the market would happily have paid.

Another two dozen had the opposite problem, and that one's more dangerous because it's silent. Their cost-plus number had ended up above the market. No customer emails to say "hey, you're too expensive." They just buy the other one. Those lines weren't bleeding margin, they were bleeding sales, and the only evidence was a soft conversion rate nobody had a reason to investigate.

Cost-plus pricing isn't wrong. For a lot of the catalogue it's exactly right, and it's how most AU retailers set a first price on a new line. The problem is what it never asks. Cost-plus answers one question: am I making my target margin? It never asks the question that actually decides whether you win or lose the sale, which is what everyone else is charging today. And because it never asks, it never warns you when the answer changes.

Why the drift stays invisible

Nobody's asleep at the wheel here. This category manager was good at her job. The drift hides for structural reasons.

A retailer with 8,000 SKUs and one or two people managing price can't eyeball the market every week. They react to what's loud: a supplier price rise, a customer complaint, a promo calendar. The dishwasher never made a noise. It sold fine. Margin looked healthy on paper because the markup was healthy. The report showed 38%, right where it should be. What the report couldn't show was that 38% over a two-year-old cost had become 15% under the competitor.

That's the trap. Your internal numbers look fine because they measure you against your cost, and your cost is the one thing that hasn't changed. Cost-plus isn't conservative. It's a smoke detector with the battery pulled out. The house can smell fine for a very long time.

Scale one dishwasher across a catalogue and it stops being a rounding error. Forty-odd drifted lines never show up as a loss you can point at. They hide inside a blended margin that looks two points softer than last year, and everyone blames freight or the supplier.

Two questions, daily

The fix isn't complicated, and it isn't "throw out cost-plus." It's to stop letting the price freeze.

First question: what is the market actually doing today? Not last quarter. Today. If you can see every morning where each key line sits against competitors and against RRP, a $300 gap can't hide for seven months. It shows up the day after it opens, while it's still a $40 gap you can act on.

Second question is the guardrail, because visibility on its own tempts you to over-correct and give back margin you didn't need to. The discipline is two numbers per product: the floor you won't price below, and the ceiling you won't price above. When the dishwasher's competitor dropped, the right move wasn't "match them." It was come down to $10 under, stay well above the floor, keep the customer, keep the margin. A decision, not a reaction.

That's roughly the job Follow the Market does: daily competitor and RRP visibility across your catalogue, with a floor-and-ceiling guardrail so you reprice on purpose instead of chasing.

The category manager fixed her dishwasher that afternoon. Working back through the rest took another three weeks. She reckons the drift had cost her the better part of a full-time salary in margin, quietly, for the better part of a year, and the only reason she found out was one customer who happened to shop around.

Most of your competitors haven't had that email yet.