Pricing

Price waterfall

The step-by-step decomposition from list price down to pocket price, naming every reduction along the way.

A waterfall is a diagnostic tool: laid out for a customer or segment, it shows exactly which concessions are consuming margin and in what order. It almost always contains at least one surprise, because the reductions are administered by different teams and have never been summed.

Building one is straightforward in principle and hard in practice, because the off-invoice steps live in the rebate, promotion and claims systems rather than in the order.

Related terms

Pocket price

What you actually keep from a transaction after every on-invoice and off-invoice reduction.

Net-net price / cost

Price or cost after all rebates and allowances — on the sell side, what you keep; on the buy side, what you truly paid.

Discount stacking

The accumulation of multiple independently-approved concessions on the same transaction, producing a combined reduction nobody authorised.

Price triangulation

Reconciling the three prices that exist for one transaction — invoice price, contract price and net-net pocket price — into a single agreed number.

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