1. Client Overview

• Industry: Freight, Logistics, and Supply Chain Solutions
• Business Size: $10B+ revenue globally; ~$1.1B across three key business units in scope (Toll Express, Toll NQX, Intermodal)
• Customer Base: Serves ~13,000 active accounts across trade, retail, mining, government, and food sectors
• Client Context:
  Toll Group is one of Australasia’s largest logistics firms, but by 2016 was under pressure from declining margins, flat growth, and an increasingly procurement-driven customer base. Gross margins sat at 45%, but EBIT had slipped to 3%—reflecting serious pricing discipline issues and a cost-plus mindset ill-suited for a modern, value-sensitive market.

2. Challenge / Problem

• Symptoms Observed:
  
  • Overreliance on cost-plus pricing structures, especially in major accounts
  • Margin thresholds applied without real value discovery or strategic negotiation
  • Sales teams had high discretion, lacked formal pricing training, and defaulted to volume-based discounting
  • Lack of pricing consistency across business units despite shared major accounts (e.g. Spotlight, Glencore)
  • Absence of documented pricing strategy, price guidance playbooks, or value-based negotiation frameworks
• Strategic Impact:
  
  • Tens of millions in gross margin leakage annually due to under-pricing of major contracts and unmanaged long-tail accounts
  • Weak customer agreements led to scope creep, low switching costs, and no performance-linked protections
  • Missed pricing signals across shared accounts and regions created customer confusion and internal misalignment
• Notable Insight:

In one account worth over $20M/year, TOLL was operating on a month-to-month verbal agreement with minimal price security—despite delivering multi-business-unit services to the customer across freight modes.

3. Objectives of the Engagement

• Uncover and quantify lost gross margin and pricing performance risk across all units
• Replace flat, arbitrary markups with structured, value-based pricing aligned to service complexity and switching costs
• Implement national pricing strategy and team structure while respecting operational differences at the business unit level
• Train frontline sales and commercial staff on price justification, negotiation, and value defence
• Develop a price optimisation engine (Project Blackbird) to target long-tail margin expansion and remove override culture

4. Our Approach

• Phase 1: Diagnostic Assessment
  
  • Surveyed 70+ leaders across sales, finance, and commercial functions
  • Analysed customer agreements, rate cards, CPQ workflows, and contract structures
  • Benchmarked Toll’s practices against pricing leaders such as DHL, FedEx, and UPS
  • Scorecarded pricing maturity across people, value, and structure domains
• Phase 2: Strategy Workshops
  
  • Facilitated executive workshops and unit-level alignment sessions
  • Introduced the Customer Value Canvas to identify ‘value at risk’ and ‘value in use’ across major accounts
  • Scoped key risks in scope creep, unstructured rebates, and misaligned rate banding
• Phase 3: Pricing Engine Development
  
  • Built algorithmic pricing model to optimise 13,000+ customers using historical deal patterns, lane cost profiles, and service complexity
  • Created a Pricing Mastermind structure to support rollout, ensure BU adoption, and avoid operational disruption

5. Key Actions Taken

6. Results Achieved (Within 12 Months)

7. Client Feedback

“We’d been using cost-plus for decades. What Pricing Insight brought us was a system—a logic—that respected our operational complexity but pushed us to think like a premium value business again.”
— Executive General Manager, Toll Express

8. What This Means for Similar Companies

In freight and logistics, where the core product (moving freight) is often viewed as commoditised, pricing discipline becomes even more critical. What Toll’s case reveals is that the value lies in the network, reliability, switching cost, and capability—not just the cost per pallet or lane. And without clear pricing governance, companies routinely price below their worth. With the right tools and strategy, logistics providers can reclaim margin without losing volume.

9. Contact Us

To explore how your logistics or asset-based business could unlock pricing power and capture EBIT gains of 200 to 900 basis points, contact:

Ron Wood
Managing Director, Pricing Insight

ronwood@pricinginsight.com.au |

www.pricinginsight.com.au