MRO margin rarely disappears in one big mistake. It leaks out a few cents at a time. A vendor raises cost on abrasives and nobody updates the sell price. A rep gives a plant a special price on gloves three years ago, and it's still there. A contract account was priced to win and never revisited. Each one is small. Together they're the difference between a good year and a flat one.
Find the leaks
Margin leaks shows lines sold below cost or below your floor margin, and vendor cost increases you haven't passed on. That second part is where a lot of MRO margin goes. When a lubricant supplier or a janitorial manufacturer raises prices, the increase often lands on hundreds of items at once, and some of them never make it into your customers' pricing.
Below-cost lines are usually accidents: an old contract price, a quote that was never updated, a special that turned into a habit. They're easy to fix once someone can see them, and almost impossible to find by hand in a catalog of thousands of MRO items.
Seeing the list is half the battle. Once you know which lines are below your floor, you can fix the ones that should be fixed and leave the deliberate loss-leaders alone.
Small increases, more often
Big annual price increases get attention. Buyers call, compare and sometimes move business. Micro price increases take a different approach: small increases of one-half to two percent every few months, too small to call about, that add up over two or three years.
In MRO, where a single plant might buy hundreds of different items, small and steady adjustments on the long tail are far less disruptive than a big increase on everything at once.
Some accounts are priced below what the large national distributors charge them. That's not good service; it's margin you're giving away. Priced below market shows those accounts, with a suggested two to five percent increase and a note to the rep, so the rep can have the conversation with context instead of surprise. Rep commissions tied to margin give the rep a reason to have it, too.
Know what the competition is really charging
Competitor pricing intel shows what the big national distributors give off list on public bids, plus photos and PDFs of competitor quotes and bid sheets your reps find in the field. When a plant buyer says "Grainger gives us a better price," you can check what that really looks like instead of cutting your price on faith.
A practical margin routine for an MRO distributor:
- Review margin leaks monthly and fix the vendor cost increases you missed.
- Put long-tail items on a micro price increase schedule.
- Work the priced-below-market list one rep and one account at a time.
- Have reps photograph competitor quotes and bid sheets when customers share them.
- Show reps their live commission from invoices, so they see how margin affects their pay.
Margin and service go together
None of this means squeezing customers. The plants that value a managed storeroom, fast quotes on oddball parts and reorders that never miss will pay a fair price for them. The point is to stop giving away margin by accident, so you can afford to keep delivering the service that keeps those plants loyal.
Want to see it with your own catalog? See how it works.