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  • Xella:

    Rebuilding pricing power in building materials

    Industry: Building materials, sand-lime bricks and aerated concrete

    Headquarters: Vuren, the Netherlands

  • Context

    Xella Nederland supplies sand-lime brick and aerated concrete (Silka, Ytong, Hebel) to Dutch construction, partly through trade partners who resell to contractors, partly direct.

    Price was set deal by deal. The same product left the plant against different list prices. Discounts were structural and unconditional, largely unlinked to any volume commitment, and rebates rewarded turnover rather than performance against a promise. Freight, big enough on its own to decide whether a project is profitable, sat invisible inside a single national delivered price, so nearby projects quietly subsidised distant ones. Delayed projects cost inventory and lost capacity, and carried no consequence. Price increases arrived a year late, because the previous year's price followed the project rather than the calendar.

    The annual contract, the one instrument meant to hold all of this together, had drifted into a document that protected the buyer. And the incentive ran the wrong way: Xella products are basket leaders for trade partners, so the fastest route to a project was the lowest possible price on the Xella line, and the margin lost there was recovered on everything the partner attached behind it.

    Approach

    Newalpha started with evidence rather than opinion: transaction-level analysis across trade and construction services, a profitability assessment, a structural read of the contract portfolio, and interviews across the commercial organisation.

    That produced twelve solution directions, ranked by value and by how fast they could realistically land. Four carried most of the value: performance-based discounts and rebates tied to committed and substantiated volume; a strict price-increase and price-validity policy, with longer price certainty offered as a priced option rather than given away; a freight pricing model built on actual cost and on Xella's delivery-distance advantage per project; and an annual contract redesigned as a balanced exchange.

    The decisive choice was to build the instruments alongside the advice. A quoting tool that walks a deal from list price through sawing, discount, freight and bonus to net margin per cubic metre, and checks it against a floor, so the conversation with an account manager is about margin, not about discount percentage. A delivery-area model that turns drive time and competitive position into a clear primary and secondary map, with surcharges derived from what freight actually costs above the national average already baked into the delivered price. And a contract generator in which pricing owns the tiers, the corrections and the clause library, sales fills in the customer, and a complete contract with its annexes comes out in minutes.

    Each direction was modelled per customer, piloted on quote business first, and only then carried into annual contracts and the new negotiation season. Governance was built with it: weekly workstreams, a monthly steering committee, clear ownership per lever. All of it handed over to Xella's own project lead at the end of the engagement.

    Result

    Pricing at Xella is now a decision with a floor under it. A quote is judged on net margin per cubic metre against a defined minimum, not on how deep the discount looks. Delivery geography is a choice rather than an accident: primary areas delivered free, secondary areas delivered against a surcharge that reflects real cost. The annual contract has become a genuine exchange: discount against committed and substantiated volume, extended price certainty against an explicit correction, late call-off changes against the cost they cause, exclusivity as a condition rather than an assumption. Contracts that took days to assemble by hand are generated from one template, so terms no longer drift between brands and product groups.

    The assessment identified a multi-million euro annual pricing opportunity, phased deliberately: a first tranche addressable in the opening year, full run-rate by year three. Xella runs it internally now, with the tools, the governance and the negotiation calendar to keep it.

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