Case study · Building materials · Geosynthetics and infrastructure · 8 min read
Source: Pricing Insight engagement records, including Geofabrics' program notes, the confidential sales team pricing survey and the group pricing review. Company facts from Geofabrics Australasia. No financial result is claimed.
A premium Australian manufacturer, negotiated down to the price of the cheapest import. Geofabrics makes geotextiles and other geosynthetics for roads, mining, landfill, water and coastal works, and backs them with research, testing and engineering support. Its sales engineers sold that offer into tenders and projects where contractors compared one roll of fabric with another on price, and where cheaper imported products were offered as equivalent. Prices were set branch by branch between a recommended price and a cost-plus floor, and the sales team told Pricing Insight it had no shared way to defend the difference. Pricing Insight ran a value-based pricing and negotiation program for the sales force, along the same lines as its later Pricing University work with Big River Group: a confidential diagnostic of every salesperson's view of pricing, a debrief with management, Pricing Masterclass training in value-based pricing and negotiation skills, and Customer Value Discovery for bid, tender and contract negotiations, built around the value a customer puts at risk when a cheaper product fails.
| Client | Geofabrics Australasia, which describes itself as the largest manufacturer of geotextiles for infrastructure in Australasia. It supplies geotextiles, geogrids, geomembranes, drainage and erosion products, including the bidim range, to civil, mining, waste, water and coastal projects in Australia and New Zealand. |
| Service | Value-based negotiation training and Pricing Masterclass: sales team diagnostic, management debrief, Masterclass training days, and Customer Value Discovery for bids, tenders and contracts. |
| Status | Capability built. No financial result is claimed. |
| Audience | Sales engineers, technical sales representatives, state managers and technical support staff across the Australian branches, with management. |
| Scope | The Australian business, with a parallel review of pricing practice in the Maccaferri businesses in Australia and New Zealand. |
The brief
Give the sales engineers a value-based way to price and negotiate a premium product against cheaper imports, in tenders as well as everyday orders.
01A premium product, sold into price-led tenders
Technical leadership, priced like a commodity. Geofabrics manufactures in Australia, runs research and testing facilities, and gives engineers and contractors design and technical support. That is what consulting engineers value: the right fabric for the design life of a road, a landfill liner that will not fail an audit, and someone to call when the ground behaves badly. Contractors who buy the product often see it differently, and on generic specifications they buy on price.
Pricing was set at the branch. Each product carried two prices in the system: a recommended price, which was poorly maintained and routinely overridden, and a minimum sell price at cost plus a small margin, which only head office could release. Branches priced in the gap between the two, each with its own spreadsheet. Large projects were priced one at a time, and national agreements were set aside when a big job came along.
The pressure came from both sides. Competitors sold imported products at lower prices and offered them as equivalent. Inside the business, the message was to protect margin as a premium supplier and, when volumes fell, not to lose a job. A price increase made after the fall in the Australian dollar had been badly communicated to customers and to the sales team.
The sales team named the problems in the diagnostic.
A floor, not a strategy.
Salespeople described the minimum sell price as the only rule they had. Without guidance on where to price above it, quotes drifted down to the floor under pressure.
One price model for every market.
National prices built up from the cost of goods, with no difference between a technical landfill job and a generic road contract.
Projects sold by Dutch auction.
On large projects, price was negotiated down step by step, rather than set once against the value of the job.
Price increases imposed, not explained.
A general price increase after the currency fell reached customers without notice or reasons, and staff reported lost sales and damaged relationships.
No training in value selling or negotiation.
Staff reported no systematic sales, value-proposition or negotiation training, so each salesperson defended price as well as their own experience allowed.
"We do not have a systematic approach to value propositions." Sales engineer, Geofabrics.
02What the diagnostic found: value the customer recognised, and a sales force that could not price it
Customers valued what Geofabrics did well. Asked what customers valued, salespeople named technical support, product quality and reliability, Australian manufacture, compliance with Australian standards, fast supply and problem-solving on site. Consulting engineers understood that value; contractors and public road authorities often did not, and wrote specifications that let any product in.
The sales force could describe the value but not quantify it, and so negotiated on price. Competitor activity was tracked informally, lost jobs were reviewed branch by branch, and there was no common method for preparing a negotiation or deciding when to walk away. The comparison of pricing practice across the group showed the same gaps in different forms: price levels without rules for moving between them, authority limits that were not consistently used, and price lists held in spreadsheets outside the system.
Six priorities followed.
Quantify value at risk.
Put a figure on what a failed fabric costs the customer in rework, delay and design life, so the price difference has something to be weighed against.
Price by segment.
Different price positions for specification-led segments such as landfill and mining, and for price-led segments such as generic road work.
Prepare every tender negotiation.
Know the customer's alternatives, the concessions available and the walk-away point before the price is discussed.
Set price levels above the floor.
Clear levels for volume and customer type between the recommended price and the minimum, with authority to move between them.
Explain price increases.
Plan increases, give customers notice and reasons, and give the sales team the case before the customer hears it.
Train the whole sales force in value-based pricing and negotiation, using its own customers and jobs.
03What Pricing Insight did: diagnostic, Masterclass and value-based negotiation for bids and tenders
One program for the sales force, built on its own answers. The program followed the same sequence Pricing Insight later used with Big River Group: find out what the sales force thinks, train it on its own customers, and turn its ideas into margin initiatives.
Diagnosed the sales team.
A confidential online survey of sales engineers, technical sales staff and state managers, scoring pricing strategy, policy, structures, discounting, value and negotiation, with open questions on what customers value and how competitors use price.
Reviewed pricing across the group.
A comparison of price lists, price levels, controls and authority limits across Geofabrics and the Maccaferri businesses in Australia and New Zealand.
Debriefed management.
The diagnostic results identified where the sales force agreed and where views were divided, and set the agenda for the training.
Ran Pricing Masterclass training.
Training days in value-based pricing and negotiation skills, with an online pre-work survey, ending in a plan that held individuals accountable for its actions.
Applied value-based negotiation to bids and tenders.
Customer Value Discovery with the sales team: value drivers by customer segment, value at risk, and a structured approach to preparing and negotiating bids, tenders and contracts.
Customers value risk far more than features. A salesperson who can quantify it does not need to match the cheapest price.
04What changed: a common method for pricing and negotiating on value
The sales force left with a shared language and a shared method. Sales engineers who had defended price on their own experience had a structured way to quantify value at risk, prepare a tender negotiation and hold a price above the floor. Management had the sales team's own account of how pricing worked in practice, segment by segment, and a list of priorities for price structure and policy.
Status: capability built. Outcomes: the diagnostic, the group pricing review, the training and the value-based negotiation work, from Pricing Insight's records. No financial measure was set, and no change in price, margin or win rate is claimed. Survey scores, staff names and fees are not disclosed; one comment is quoted without a name.
05The Pricing Periodic Table elements this work built
Seven elements built, six identified for the next stage. The Pricing Periodic Table maps 61 elements of pricing capability in nine domains across three pillars: Value, People and Structures. Most of this work sits in the People pillar, in market, sales and negotiation.
03 Vq, Value quantification and 05 Dr, Delivery reliability and value at risk: what the customer gains from the right product, and what it risks with a cheaper one. 28 Cc, Commercial capability and training and 29 Vs, Value selling: the Masterclass. 34 Ng, Negotiation skills, 36 Cn, Concession planning and 37 Bt, Buyer and procurement tactics: value-based negotiation for bids, tenders and contracts. The outlined elements are the structural priorities: a written pricing strategy (06 Ws), pricing by segment (08 Sg), tender and project pricing (18 Tp), a planned price increase process (43 Pi), price levels and volume breaks above the floor (52 Rl), and discount authority (61 Da).
06Three lessons for a CEO
A floor price is not a pricing strategy
A minimum sell price stops losses. Without guidance on where to price above it, salespeople under pressure treat it as the target.
Negotiate on the cost of failure
Against a cheaper import, the case for a premium product is the risk it removes: rework, delay and a shorter design life. Teach the sales force to put a number on it.
Price the segment, not the product
A landfill liner audited by a regulator and a fabric for a generic road job are different sales. One national price model cannot serve both.
07Questions this case study answers
What is value-based negotiation?
Value-based negotiation sets and defends price on the value the customer receives and the risk it avoids, rather than on cost or a competitor's price. The seller quantifies that value before the negotiation, plans its concessions and knows its walk-away point. At Geofabrics, sales engineers learned to negotiate on the cost of a failed fabric against the saving from a cheaper import.
What should negotiation training for technical sales engineers include?
Training on the team's own customers and tenders: how to quantify value at risk, how to prepare a negotiation with procurement, which concessions to trade, and when to walk away. Geofabrics' program began with a confidential diagnostic of the sales team, so the Pricing Masterclass and the negotiation work addressed the problems the salespeople had named themselves.
How do you negotiate against cheaper imports in a tender?
Move the comparison from the price per roll to the cost of the job going wrong. Quantify the rework, delay and design-life risk the customer avoids, use it to influence the specification with consulting engineers, and prepare the concessions you will trade before the price is discussed. Price-led segments and specification-led segments need different price positions.
Related case studies
Value-based negotiation training for your sales team
The first conversation covers your markets, the tenders and procurement pressure your team faces, and how a negotiation program would be built around your own customers. Ron Wood, +61 410 534 099.
Ron Wood is the Founder and Managing Director of Pricing Insight, an Australian pricing strategy consultancy he established in 2007. He has worked in pricing for around 30 years, first as a pricing and commercial manager in consumer goods, building materials and capital equipment, and since then across more than 160 pricing engagements. He also founded Pricing University, which has trained more than 5,000 executives.
To discuss value-based negotiation training for your team, contact Ron Wood at info@pricinginsight.com.au or on +61 410 534 099, or visit Pricing Insight.
Engagement details are from Pricing Insight's records, including Geofabrics' program notes, the confidential sales team pricing survey and the group pricing review. Company facts from Geofabrics Australasia. Survey scores, staff names and fees are not disclosed. No financial result is claimed. Photography: Geofabrics Australasia.
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