Pricing Rules (Markups, Margins, Minimum Sell, and Customer-Specific Exceptions)

Pricing rules turn your commercial strategy into repeatable quote outcomes. Instead of relying on manual calculations, spreadsheets, or individual sales habits, Velocity lets you define pricing logic that applies automatically by customer, service type, or route, while still allowing controlled overrides when negotiation requires it.

This guide explains how to set up pricing rules that scale: markups, margins, minimum sell thresholds, customer exceptions, and the governance practices that prevent pricing drift.

Markup vs Margin vs Minimum Sell (Simple Definitions)

These terms are often confused. Use these definitions consistently across your team.

Markup

What you add to your cost to produce a sell price.

• Formula: Sell = Cost + Markup
• Example: Cost 1,000 + 10% markup = 1,100

Markup is usually easier to apply in rules because it is directly tied to cost.

Margin

The percentage of the sell price that is profit.

• Formula: Margin = (Sell − Cost) / Sell
• Example: Cost 1,000, Sell 1,250 → Margin = 20%

Margin is often how leadership measures performance, so rules often include margin targets or minimum margins.

Minimum Sell

A floor price to prevent underpricing (especially when costs fluctuate or rates are incomplete).

Minimum sell can be defined as:

• A minimum total sell amount (e.g., “never sell below 150”)
• A minimum sell per unit (per container, per CBM, per kg)
• A minimum margin threshold (e.g., “never below 12% margin”)

When minimum sell is critical: LCL and Air shipments, where minimum charges and small shipments can otherwise become unprofitable.

Rule Hierarchy (Global → Segment → Customer → Lane/Service → Quote-Level Override)

A scalable pricing system requires a clear priority order. The objective is predictable outcomes and controlled exceptions.

A recommended hierarchy:

1. Global rulesDefault logic applied across the organization (baseline markups and minimum sell).




2. Customer segment rulesRules for groups like Key Accounts, SMEs, eCommerce, Partners, or Internal.




3. Customer-specific rulesContracted pricing, negotiated exceptions, or special margin targets for one customer.




4. Lane / service rulesRoute- or service-specific adjustments (e.g., specific corridor, premium service, special equipment).




5. Quote-level overrideA controlled, logged adjustment made for a specific quote (should be used sparingly).

Why Hierarchy Matters

Without hierarchy, teams see issues like:

• Rules stacking unexpectedly (double markups)
• Customer discounts being overridden by lane rules
• Different users getting different outcomes for the same customer and lane

A clear hierarchy ensures:

• The system chooses one intended rule path
• Exceptions override only where they should
• Pricing behavior is explainable internally and defensible externally

Rule Types: Percent / Tiered / Flat

Velocity supports markups that match how forwarding teams price in the real world.

Percentage Rules

Use when you want pricing to scale with cost.

Common examples:

• “Apply 12% markup on base freight for all FCL.”
• “Apply 8% markup for key accounts on Air freight.”

Best for:

• Most standard freight pricing
• Lanes with variable carrier rates
• When you want profitability to scale with cost

Flat Fee Rules

Use when you want fixed commercial add-ons.

Common examples:

• “Add 35 documentation fee per shipment.”
• “Add 20 handling fee per booking.”

Best for:

• Operational fees and documentation
• Predictable admin costs
• Protecting small shipments from being unprofitable

Tiered Rules

Use when the pricing should change at thresholds.

Common examples:

• Weight breaks (Air/Courier)
• Volume breaks (LCL)
• Subtotal thresholds (higher markup for smaller shipments; lower markup for larger)

Best for:

• Air and Courier where pricing is sensitive to chargeable weight
• LCL where minimums and brackets are common
• Commercial strategies like “protect the small shipments, reward the larger ones”

Customer-Specific Exceptions and When to Use Them

Customer exceptions are essential, but they must be structured so they do not become uncontrolled discounting.

Use Customer-Specific Rules When…

• You have contracted pricing or service-level agreements
• A customer has a negotiated markup cap or margin floor
• You want consistent pricing behavior across all users for that customer
• The customer requires a specific quote format or cost structure

Avoid Customer-Specific Rules When…

• The change is truly one-time and unlikely to repeat
• The user is trying to “fix” a quote outcome that should be corrected in base rates or surcharges
• The exception would create long-term drift from your pricing policy

Best Practice: Separate “Commercial Strategy” from “Operational Corrections”

• Pricing exceptions should reflect a customer relationship decision
• Operational issues (missing surcharges, wrong units, wrong validity) should be fixed in rates or normalization—not handled via customer pricing exceptions

Overrides: Governance and Audit Expectations

Overrides are inevitable in sales, but they must be governed.

When Overrides Are Appropriate

• A negotiated discount approved by leadership
• A competitive match for a strategic deal
• A special shipment with unusual constraints that justify a one-off adjustment

When Overrides Are Not Appropriate

• Correcting a broken rate upload or duplicate surcharges
• Fixing a currency/unit mismatch
• Replacing missing rate data

Governance Recommendations

To keep pricing reliable:

• Limit override permissions to specific roles (pricing manager, team lead)
• Require a reason note for each override (short, searchable)
• Ensure overrides are recorded in audit logs (who, when, what changed)
• Review overrides regularly (weekly/monthly) to detect patterns and training gaps

A governed override model protects margin, reduces disputes, and creates an organizational learning loop.

Testing Rules Before Rollout (Sandbox Checklist)

Do not deploy pricing rules “live” without testing. Use a structured test plan to prevent incorrect outcomes.

Sandbox Checklist (Practical and Repeatable)

1) Define your test lanes (“golden lanes”)

• 5–10 top lanes per mode (FCL, LCL, Air, Courier)
• Include at least one high-value lane and one low-value lane

2) Test each rule type

• Percentage markup scenario
• Flat fee scenario
• Tiered rule scenario

3) Test priority and hierarchy

• Global rule only
• Segment rule overriding global
• Customer rule overriding segment
• Lane/service rule overriding customer (if intended)
• Quote override as final layer (controlled)

4) Test boundary conditions

• Validity date edges (start date / end date)
• Tier thresholds (exactly at 100 kg, 101 kg, etc.)
• Minimum sell enforcement on small shipments

5) Validate quote outputs

• Totals make sense
• Line items remain consistent
• No double application of rules
• Margin/minimum sell is enforced correctly

6) Document and publish

• Record which rules were deployed, by whom, and when
• Communicate changes to sales and ops (what changed and why)

Best Practices Summary

• Use clear definitions for markup, margin, and minimum sell
• Implement a strict hierarchy to avoid unpredictable outcomes
• Choose rule types that match the business logic (percent/flat/tiered)
• Use customer exceptions for real commercial agreements, not for fixing data issues
• Govern overrides with role-based access, required notes, and periodic review
• Test with golden lanes and boundary cases before rollout