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.

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.

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

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

Key Actions Taken

1. Customer Value Discovery
   Created customer canvases to align pricing with value delivered across size, urgency, network dependence
2. Pricing Strategy Framework
   Replaced flat increases with pricing logic by segment, risk, and deal type (e.g. project vs contract freight)
3. Pricing Team Structure
   Established centralised pricing strategy team and embedded analysts in each BU reporting to a Group Head of Pricing
4. Sales Enablement & Training
   Trained reps on price maths, objection handling, procurement tactics, and value storytelling
5. Rate Card & Agreement Redesign
   Redefined contracts to specify scope boundaries, tiered service levels, and performance-linked rebates

Results Achieved (Within 12 Months)

1. Margin Expansion Opportunity
   $8.39M EBIT uplift modelled in Year 1 (0.76% yield on $1.1B revenue base)
2. Price Uplift on Long Tail
   Algorithmic pricing delivered risk-free margin gain across unmanaged accounts
3. Sales Override Reduction
   New approval workflows reduced bottom-margin deal frequency by over 50%
4. Customer Agreement Quality
   Replaced “rate card with T&Cs” contracts with value-linked agreements and measurable ROI tracking
5. Cultural Shift in Sales
   Sales teams began using value drivers and account strategy tools in negotiations rather than defaulting to discounting

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

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.

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