Discounting & cross-subsidy

Standard reporting was never designed to find profit sinks.

Targeted analysis with pricing and profit attribution moves EBITDA within the year. Arrow pinpoints where.

+2ptsgross margin from pricing discipline
£1M/monthcategory loss surfaced, breakeven in 3 months
$7Mannual EBITDA from portfolio costing

Pricing is the fastest profit lever and usually the least examined. We work from transaction data: who actually pays what, for what, and when, and then rebuild the discount structure around what customers demonstrably accept.

Builders’ merchant · Pricing+2pts

Till data revealed three counter staff applying three different discount rules to the same bag of cement, with the same customers accepting different prices from different staff members on different days. Replacing local discounting with centralised tiers built on a Pareto analysis of customer spend added two percentage points to gross margin.

The full story →

Segmental profitability analysis, by category, brand, activity or function, is a core Arrow skill. The tools flex to the situation: ABC, DPP, or straightforward P&L attribution. The analysis matters less than the dialogue it forces about where resources should go.

Home improvement retail · Category profitability£1M/month

A zero-based category review at a big-box home improvement retailer surfaced a £1M per month loss that aggregate reporting had hidden, along with its root causes. Breakeven took just three months.

The full story →
Brand licensing · Activity-based costing$7M

Activity-based costing at a PE-backed brand licensing business sorted the portfolio into three tiers: invest, monitor carefully and streamline now, delivering $7M of annual EBITDA and $3M of capex savings, while also reshaping the company’s buy-and-build acquisition criteria.

The full story →

Pricing and profit attribution move first because they are rapid and reliable. The additional margin can fund the growth agenda, and the profitability momentum gives investors the additional confidence they need to support management to pursue the highest impact levers. The full story →

There is often value to realise that hasn’t yet been searched out.
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