Illustrative case study · Private Equity

Buyers want cuts on spot orders. On-site bins hold their price.

The client, a private equity investor, was weighing a fastener maker with a large on-site supply business: would its margins hold as buyers push for lower prices? Both sides weighed in, 200 makers and buyers, in a study that took 11 days.

Illustrative scenario

Samplen = 200

Illustrative report

Industrial Fastener Market Dynamics

Can fastener margins hold over the next two years as buyers push for lower prices?

Study architecture

Read the outlookMakers’ margin expectations over the next two years

Mirror the priceThe same price question for makers and buyers

Weigh the binsHow on-site supply programs change the pressure

Scope

Makers and buyers may expect different price cuts, and the gap between them shows where margin is at risk.

Sample

200

Pricing heads at fastener makers and plant buyers who sign fastener contracts.

Research by

Study typeTwo-sided pricing study

ScenarioIllustrative

Fastener market dynamics · Executive reportExecutive summary

Executive summary

Fastener price pressure falls on spot orders, and on-site supply programs hold their price

The 100 fastener makers and 100 plant buyers took the same price question for next year, split by parts in on-site bins and spot orders. Makers braced for the deepest cuts on their on-site programs. Buyers expect the reverse, 5.6% off spot orders and 1.3% off bins, and most of those with bins on their floor would rebid only after missed deliveries.

44%n = 100

of makers expect margins to narrow in two years

5.6%n = 100

cut buyers expect on spot orders next year

1.3%n = 64

cut buyers expect on parts in on-site bins

73%n = 64

of buyers with bins rebid only after missed deliveries

Figures rounded. Base n = 200 makers and buyers unless stated.

Top lines

1Makers lean toward narrower margins, with steel and wire costs leading the pressuresMargin outlook and pressures, makers03

2Buyers expect deep cuts on spot orders, the opposite of what makers braced forThe mirrored price question04

3Most buyers with bins rebid only when deliveries failOn-site supply programs and rebid triggers05

4Makers with more on-site business expect their margins to holdMargin outlook by on-site share of sales06

5Sample, screener and quality controlWho we interviewed and how07

AAppendixQuestion flow and data tables09

Sample

200 makers and buyers

Segments

100 manufacturers, 100 buyers

Method

AI-moderated interviews, mirrored price question

Markets

US industrial manufacturing

Illustrative report. The company, scenario, and all figures are fictional.

Illustrative report02

Illustrative reportExecutive summary

Illustrative example. The company, scenario, and all figures are fictional. They show UserCue’s method and deliverable format. They do not come from any client study.

The engagement

Delivered in

days, with the report, the data file and a live readout.

Interviews

200

Pricing heads at fastener makers and plant buyers of fasteners.

Audiences

100 manufacturers and 100 buyers.

Method

Forecast

Both sides forecast next year’s price change for on-site bins and spot orders.

The brief

Client

A private equity investor

Decision

Whether a fastener maker’s margins hold under buyer price pressure

Stage

Commercial diligence, before a bid

How we ran it

Approach

AI-moderated interviews with a mirrored price question

Measured

Margin outlook, expected price cuts, on-site supply programs

Sample

Fastener makers and plant buyers in the US

Headline figures

Margin outlook44%

of makers expect gross margins to narrow over the next two years

Spot orders5.6%

price cut buyers expect on spot orders next year, against 1.3% for on-site bins

On-site hold73%

of buyers with bins would rebid the program only after missed deliveries

The question

Can fastener margins hold as buyers push for lower prices?

On-site supply programs, where the supplier keeps bins stocked on the customer’s floor, were a large book at the fastener maker the investor was weighing, in a market where buyers were asking for cuts. Both sides of the price conversation mattered: what makers expect to give up and what plant buyers expect to win.

Do makers expect their margins to narrow over the next two years?

What price cuts do buyers plan to ask for?

Do on-site programs ease the pressure?

What we did

How the study ran, start to finish.

1Kickoff
The deal team’s margin question.
Can fastener margins hold over the next two years as buyers push for lower prices? The kickoff turned it into three questions: whether makers expect margins to narrow, what cuts buyers plan to ask for, and how on-site supply programs change the pressure.
2Design
Makers and buyers, a mirrored price test.
On one side, pricing heads at fastener makers; on the other, plant buyers who sign fastener contracts, 100 of each. Both sides gave the price change they expect next year, separately for on-site bins and spot orders, so the two views line up.
3Fielding
Both sides, in their own words.
Buyers with bins named their rebid triggers, by voice or text, quant and qual in one conversation, in median 35-minute interviews. The researcher read all 223 and removed 23 for resellers posing as buyers, makers for whom fasteners are a sideline, or duplicates, leaving 200.
4Analysis
Buyers target spot orders.
The researcher compared both sides’ expected cuts by supply route, and the pressure fell on spot orders, where makers had worried least. Buyers expect a cut over four times deeper on spot orders than for on-site bins, 5.6% to 1.3%, the reverse of makers’ fears.
5Readout
5.6% off spot, 1.3% off bins.
In a live readout, the researcher presented a 33-page report that set the expected cuts beside the margin outlook, plus the full data file. The margin model now splits on-site and spot books, with on-site growth first in the plan.

What we found

Four findings from the report.

Summary

Makers lean toward narrower margins, and they expect deeper cuts on their on-site supply programs than on spot orders. Buyers aim elsewhere: they expect a cut more than four times deeper on spot orders than on parts in on-site bins. Most buyers with bins on their floor would rebid the program only after missed deliveries, so the on-site book faces the least price pressure.

Fastener market dynamics · Executive reportTop line 1

Top line 1 of 4

Makers lean toward narrower margins, with steel and wire costs leading the pressures

¹ Q9. Over the next two years, do you expect your gross margin on fasteners to narrow, hold flat or widen? Single select, n = 100.

² Q7. Which pressures will matter most to your margin? Multi-select, n = 100.

44% of makers expect gross margins to narrow over the next two years, 37% expect them flat and 19% expect them to widen¹. Steel and wire costs lead the pressures they name, ahead of buyer price demands and freight. Makers that sell a third or more through on-site programs are calmer, the subject of top line 4.

44%n = 100

of makers expect gross margins to narrow

37%n = 100

expect them to hold flat

19%n = 100

expect them to widen

67%n = 100

name steel and wire costs as a top pressure

Margin pressures makers name for the next two years

Top pressures on margin, multi-select (n = 100)

Gross margin outlook, next two years (n = 100)

NarrowFlatWiden

Pressures makers expect to grow most

1Steel and wire costs
2Buyer price demands
3Freight and logistics

Margin outlook is single select, shares rounded. Pressures are multi-select and do not sum to 100.

Supporting evidence

Buyer price demands rank second among makers’ pressures, and first among makers that sell mostly on spot orders. § 3.2
Makers expecting wider margins are mostly those with specialty or certified parts. § 3.3²

Illustrative report03

Fastener market dynamics · Executive reportTop line 2

Top line 2 of 4

Buyers expect deep cuts on spot orders, the opposite of what makers braced for

¹ Q5 (makers) and Q6 (buyers). What price change do you expect next year on on-site programs and on spot orders? Open numeric.

² Bin-price audit questions are in the appendix tables.

Both sides took the same question: what price change do you expect next year, for parts in on-site bins and for spot orders? Buyers expect 5.6% off spot orders and 1.3% off parts in on-site bins¹. Makers had braced for the reverse, 3.8% off on-site programs and 2.4% off spot orders. The cut buyers expect on spot orders is more than four times the on-site one.

5.6%n = 100

buyers expect off spot orders

1.3%n = 64

buyers expect off parts in on-site bins

3.8%n = 100

makers feared for on-site programs

2.4%n = 100

makers braced for on spot orders

Expected price cuts next year, by side and supply route

Expect a cut of 3% or more next year

Expect no cut at all for on-site supply

Expected spot-order cut, buyers (n = 100)

Under 3%3% to 6%Over 6%

Same question for both sides: expected price change next year, asked separately for on-site programs and spot orders. Buyers without an on-site program responded for spot orders only. Means of stated percentages.

Supporting evidence

Buyers plan to take more drawing-based orders to tender, and to compare price per part across bidders. § 4.2
Makers expect on-site cuts because buyers audit bin prices, yet 55% of buyers with bins expect no cut at all. § 4.3²

Illustrative report04

Fastener market dynamics · Executive reportTop line 3

Top line 3 of 4

Most buyers with bins rebid only when deliveries fail

¹ Q8. What would make you rebid your on-site supply program? Single select, n = 64.

² Q8a. Have you ever ended an on-site program, and why? Open, coded.

64% of buyers run at least one on-site supply program, and 73% of them would rebid it only after missed deliveries¹. A price benchmark would trigger a rebid for 19%, and 8% plan one at the next contract date regardless. Asked what they would lose, buyers name line-side stock and the hours their teams no longer spend ordering small parts. Satisfaction runs high: 83% rate their on-site supplier good or excellent.

64%n = 100

of buyers run at least one on-site program

73%n = 64

would rebid only after missed deliveries

19%n = 64

would rebid on a price benchmark

83%n = 64

rate their on-site supplier good or excellent

What would make buyers rebid their on-site program

Rebid trigger, single select (n = 64)

What buyers would lose without the bins (n = 64)

On-site supply programs, all buyers (n = 100)

NoneOneTwo or more

Rebid trigger asked of the 64 buyers with at least one supplier-run bin program; single select, shares rounded. The follow-up asked what they would lose if the bins came off the line; coded themes, multi-mention, so shares do not sum to 100.

Supporting evidence

Buyers on two or more programs are the least likely to rebid on a price benchmark. § 5.2
Buyers who ended a past program most often name a missed delivery as the cause. § 5.3²

Illustrative report05

Fastener market dynamics · Executive reportTop line 4

Top line 4 of 4

Makers with more on-site business expect their margins to hold

¹ Q9 by Q4: margin outlook by share of fastener sales through on-site programs. n = 53 vs n = 100.

Makers that sell a third or more of their fasteners through on-site programs see a calmer two years. 21% of these on-site-heavy makers expect margins to narrow, half the rate of all makers at 44%¹. They also name buyer price demands far less often as a pressure, and more of them expect margins to widen.

21%n = 53

of on-site-heavy makers expect margins to narrow

44%n = 100

of all makers expect the same

53of 100

makers sell a third or more through on-site programs

36%n = 53

of on-site-heavy makers name buyer price demands

Margin outlook, on-site-heavy makers against all makers

Gross margin outlook over the next two years

Name buyer price demands as a top pressure

Share of fastener sales through on-site programs (n = 100)

A third or moreUnder a third

On-site-heavy makers sell a third or more of their fasteners through supplier-run bin programs. Two-proportion test at 95% confidence on the narrowing gap against the other makers. Margin outlook single select; shares rounded.

Supporting evidence

The 3.8% on-site fear comes from makers with little on-site business; on-site-heavy makers expect 2.1%. § 6.2
The target’s own share of sales on site sits well above a third. § 6.3

Illustrative report06

Top line 1 of 4 · page 03Illustrative report · top line 1 of 4 · swipeIllustrative report

Question 1 · Margin outlook

Makers lean toward narrower margins.

44% of makers expect gross margins to narrow over the next two years, 37% expect them to hold flat and 19% expect them to widen. Steel and wire costs lead the pressures they name, ahead of buyer price demands.

Narrow44%

Hold flat37%

Widen19%

Gross margin outlook, next two years · makers · n = 100

Question 2 · Expected cuts

Buyers expect deep cuts on spot orders, small ones on bins.

Buyers expect 5.6% off spot orders next year and 1.3% off parts in on-site bins. Makers had braced for the reverse: 3.8% off their on-site programs and 2.4% off spot orders.

5.6%buyers expect off spot orders

1.3%buyers expect off on-site bins

Expected price cut next year · buyers · n = 100 spot, n = 64 bins

Question 3 · On-site programs

Most buyers with bins rebid only when deliveries fail.

64% of buyers run at least one on-site supply program. 73% of them would rebid it only after missed deliveries, 19% on a price benchmark and 8% at the next contract date regardless.

Only after missed deliveries73%

On a price benchmark19%

At the next contract date8%

What would make them rebid · buyers with bins · n = 64

Question 3 · Margin by mix

Makers with more on-site business expect their margins to hold.

Makers that sell a third or more of their fasteners through on-site programs are calmer: 21% of them expect margins to narrow over the next two years, half the rate of all makers at 44%.

21%on-site-heavy makers

44%all makers

Expect margins to narrow · n = 53 on-site-heavy vs n = 100 all makers

“Take the bins away and I need two more people on the dock counting washers. Nobody is rebidding that for half a point.”

Plant buyer · Illustrative quote

Illustrative quotes

Three themes behind the numbers.

Spot orders

“Anything we buy off a drawing goes out to three bidders now. That is where I expect my savings to come from next year.”

Purchasing manager

Bracing

“We have priced for buyers coming after the bin programs. Every review meeting starts with a spreadsheet of our per-part prices.”

Pricing director

Line-side stock

“The truck comes Tuesday, the bins are full, and my line never stops for a bolt. I would not trade that for a small discount.”

Materials manager

What the investor did

Three moves made with the report.

1The model · from finding 2

Split margins into on-site and spot books.

On-site supply is priced for a 1.3% give-back next year and spot orders for 5.6%, so margin risk sits where buyers plan to push.

2The growth plan · from finding 3

Made on-site program growth the first lever.

Converting spot-order customers to bin programs leads the value-creation plan, starting with plants already buying through the target.

3The base case · from finding 4

Modeled the target on peers like it.

With well over a third of its sales on site, the target is modeled on makers like it: 21% of them expect narrower margins, against 44% of all makers.

Illustrative example. The company, scenario, and all figures are fictional. They show UserCue’s method and deliverable format. They do not come from any client study.

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Vendor selection

Can fastener margins hold as buyers push for lower prices?

How the study ran, start to finish.

1Kickoff

The deal team’s margin question.

Can fastener margins hold over the next two years as buyers push for lower prices? The kickoff turned it into three questions: whether makers expect margins to narrow, what cuts buyers plan to ask for, and how on-site supply programs change the pressure.

2Design

Makers and buyers, a mirrored price test.

On one side, pricing heads at fastener makers; on the other, plant buyers who sign fastener contracts, 100 of each. Both sides gave the price change they expect next year, separately for on-site bins and spot orders, so the two views line up.

3Fielding

Both sides, in their own words.

Buyers with bins named their rebid triggers, by voice or text, quant and qual in one conversation, in median 35-minute interviews. The researcher read all 223 and removed 23 for resellers posing as buyers, makers for whom fasteners are a sideline, or duplicates, leaving 200.

4Analysis

Buyers target spot orders.

The researcher compared both sides’ expected cuts by supply route, and the pressure fell on spot orders, where makers had worried least. Buyers expect a cut over four times deeper on spot orders than for on-site bins, 5.6% to 1.3%, the reverse of makers’ fears.

5Readout

5.6% off spot, 1.3% off bins.

In a live readout, the researcher presented a 33-page report that set the expected cuts beside the margin outlook, plus the full data file. The margin model now splits on-site and spot books, with on-site growth first in the plan.

Four findings from the report.

Summary

Fastener market dynamics · Executive reportTop line 1

Top line 1 of 4

Makers lean toward narrower margins, with steel and wire costs leading the pressures

¹ Q9. Over the next two years, do you expect your gross margin on fasteners to narrow, hold flat or widen? Single select, n = 100.

² Q7. Which pressures will matter most to your margin? Multi-select, n = 100.

44%n = 100

of makers expect gross margins to narrow

37%n = 100

expect them to hold flat

19%n = 100

expect them to widen

67%n = 100

name steel and wire costs as a top pressure

Margin pressures makers name for the next two years

Top pressures on margin, multi-select (n = 100)

Gross margin outlook, next two years (n = 100)

NarrowFlatWiden

Pressures makers expect to grow most

1Steel and wire costs
2Buyer price demands
3Freight and logistics

Margin outlook is single select, shares rounded. Pressures are multi-select and do not sum to 100.

Supporting evidence

Buyer price demands rank second among makers’ pressures, and first among makers that sell mostly on spot orders. § 3.2
Makers expecting wider margins are mostly those with specialty or certified parts. § 3.3²

Illustrative report03

Fastener market dynamics · Executive reportTop line 2

Top line 2 of 4

Buyers expect deep cuts on spot orders, the opposite of what makers braced for

¹ Q5 (makers) and Q6 (buyers). What price change do you expect next year on on-site programs and on spot orders? Open numeric.

² Bin-price audit questions are in the appendix tables.

5.6%n = 100

buyers expect off spot orders

1.3%n = 64

buyers expect off parts in on-site bins

3.8%n = 100

makers feared for on-site programs

2.4%n = 100

makers braced for on spot orders

Expected price cuts next year, by side and supply route

Expect a cut of 3% or more next year

Expect no cut at all for on-site supply

Expected spot-order cut, buyers (n = 100)

Under 3%3% to 6%Over 6%

Supporting evidence

Buyers plan to take more drawing-based orders to tender, and to compare price per part across bidders. § 4.2
Makers expect on-site cuts because buyers audit bin prices, yet 55% of buyers with bins expect no cut at all. § 4.3²

Illustrative report04

Fastener market dynamics · Executive reportTop line 3

Top line 3 of 4

Most buyers with bins rebid only when deliveries fail

¹ Q8. What would make you rebid your on-site supply program? Single select, n = 64.

² Q8a. Have you ever ended an on-site program, and why? Open, coded.

64%n = 100

of buyers run at least one on-site program

73%n = 64

would rebid only after missed deliveries

19%n = 64

would rebid on a price benchmark

83%n = 64

rate their on-site supplier good or excellent

What would make buyers rebid their on-site program

Rebid trigger, single select (n = 64)

What buyers would lose without the bins (n = 64)

On-site supply programs, all buyers (n = 100)

NoneOneTwo or more

Supporting evidence

Buyers on two or more programs are the least likely to rebid on a price benchmark. § 5.2
Buyers who ended a past program most often name a missed delivery as the cause. § 5.3²

Illustrative report05

Fastener market dynamics · Executive reportTop line 4

Top line 4 of 4

Makers with more on-site business expect their margins to hold

¹ Q9 by Q4: margin outlook by share of fastener sales through on-site programs. n = 53 vs n = 100.

21%n = 53

of on-site-heavy makers expect margins to narrow

44%n = 100

of all makers expect the same

53of 100

makers sell a third or more through on-site programs

36%n = 53

of on-site-heavy makers name buyer price demands

Margin outlook, on-site-heavy makers against all makers

Gross margin outlook over the next two years

Name buyer price demands as a top pressure

Share of fastener sales through on-site programs (n = 100)

A third or moreUnder a third

Supporting evidence

The 3.8% on-site fear comes from makers with little on-site business; on-site-heavy makers expect 2.1%. § 6.2
The target’s own share of sales on site sits well above a third. § 6.3

Illustrative report06

Top line 1 of 4 · page 03Illustrative report · top line 1 of 4 · swipeIllustrative report

Question 1 · Margin outlook

Makers lean toward narrower margins.

Narrow44%

Hold flat37%

Widen19%

Gross margin outlook, next two years · makers · n = 100

Question 2 · Expected cuts

Buyers expect deep cuts on spot orders, small ones on bins.

Buyers expect 5.6% off spot orders next year and 1.3% off parts in on-site bins. Makers had braced for the reverse: 3.8% off their on-site programs and 2.4% off spot orders.

5.6%buyers expect off spot orders

1.3%buyers expect off on-site bins

Expected price cut next year · buyers · n = 100 spot, n = 64 bins

Question 3 · On-site programs

Most buyers with bins rebid only when deliveries fail.

64% of buyers run at least one on-site supply program. 73% of them would rebid it only after missed deliveries, 19% on a price benchmark and 8% at the next contract date regardless.

Only after missed deliveries73%

On a price benchmark19%

At the next contract date8%

What would make them rebid · buyers with bins · n = 64

Question 3 · Margin by mix

Makers with more on-site business expect their margins to hold.

Makers that sell a third or more of their fasteners through on-site programs are calmer: 21% of them expect margins to narrow over the next two years, half the rate of all makers at 44%.

21%on-site-heavy makers

44%all makers

Expect margins to narrow · n = 53 on-site-heavy vs n = 100 all makers

Three themes behind the numbers.

Spot orders

“Anything we buy off a drawing goes out to three bidders now. That is where I expect my savings to come from next year.”

Purchasing manager

Bracing

“We have priced for buyers coming after the bin programs. Every review meeting starts with a spreadsheet of our per-part prices.”

Pricing director

Line-side stock

“The truck comes Tuesday, the bins are full, and my line never stops for a bolt. I would not trade that for a small discount.”

Materials manager

Three moves made with the report.

1The model · from finding 2

Split margins into on-site and spot books.

On-site supply is priced for a 1.3% give-back next year and spot orders for 5.6%, so margin risk sits where buyers plan to push.

2The growth plan · from finding 3

Made on-site program growth the first lever.

Converting spot-order customers to bin programs leads the value-creation plan, starting with plants already buying through the target.

3The base case · from finding 4

Modeled the target on peers like it.

With well over a third of its sales on site, the target is modeled on makers like it: 21% of them expect narrower margins, against 44% of all makers.

Illustrative example. The company, scenario, and all figures are fictional. They show UserCue’s method and deliverable format. They do not come from any client study.

Can fastener margins hold as buyers push for lower prices?

Do makers expect their margins to narrow over the next two years?

What price cuts do buyers plan to ask for?

Do on-site programs ease the pressure?

How the study ran, start to finish.

The deal team’s margin question.

Makers and buyers, a mirrored price test.

Both sides, in their own words.

Buyers target spot orders.

5.6% off spot, 1.3% off bins.

Four findings from the report.

Makers lean toward narrower margins.

Buyers expect deep cuts on spot orders, small ones on bins.

Most buyers with bins rebid only when deliveries fail.

Makers with more on-site business expect their margins to hold.

Three themes behind the numbers.

Three moves made with the report.

Split margins into on-site and spot books.

Made on-site program growth the first lever.

Modeled the target on peers like it.

Bring us your next diligence question.

Commercial HVAC Installer Market

Industrial Gas Distribution Buyer Study

Home Improvement Showroom Concept Test

Can fastener margins hold as buyers push for lower prices?

Do makers expect their margins to narrow over the next two years?

What price cuts do buyers plan to ask for?

Do on-site programs ease the pressure?

How the study ran, start to finish.

The deal team’s margin question.

Makers and buyers, a mirrored price test.

Both sides, in their own words.

Buyers target spot orders.

5.6% off spot, 1.3% off bins.

Four findings from the report.

Makers lean toward narrower margins.

Buyers expect deep cuts on spot orders, small ones on bins.

Most buyers with bins rebid only when deliveries fail.

Makers with more on-site business expect their margins to hold.

Three themes behind the numbers.

Three moves made with the report.

Split margins into on-site and spot books.

Made on-site program growth the first lever.

Modeled the target on peers like it.

Bring us your next diligence question.

Commercial HVAC Installer Market

Industrial Gas Distribution Buyer Study

Home Improvement Showroom Concept Test