Know-How Exchange : Strategy

Price rise due to increased cost of raw materials are treated as fair and justifiable by all reasonable customers. This is true as long as you do not use it as a cover-up to increase your margin.
Provided you give your customers due notice say 3 months and explain the reasons you should not worry too much about it.At the end of the day you have to face the economics of your industry and if you go bust trying to ignore the impact the increased cost of raw materials have on your profitability not one of your customers will gain by your going out of business. Just do it right and advice ahead of scheduled price increase.

Adam

First, you should have clear understanding of "why"- if its out of fear they'll change suppliers-- know if its a real threat or your own fear.

Its not unusual for a large and loyal customer to want a price held or price increase delayed. I have fought similar battles -- even with smaller customers who might purchase one or two sku's that are a core part of their biz. They're working hard for you and want special consideration-- and they should. Even if that consideration is a conversation and further negotiation.

Its helpful to know the real margins of the company so you know how much room you actually have to "play". You'll never nor should you convince a company to take a hit at a loss. Your value to your company is the profit you bring in the door.

You should also know where your competitors pricing to this client is. Are your prices competitive and if higher can you justify the value because of increased features and benefits. I tell clients right out when they say I don't have the lowest price-- I don't need to be.

Its also helpful if you are holding their price-- you negotiate something they will give back. I'm negotiating a deal for higher rebates with a major client, but I want more store floor space and performance goals.

Does the entire across the board increase have to be held. Are there certain items they'll accept the increase but others need to be held. Know why. Maybe the increase should be less than it is for others.

Knowing all the facts and justification will let you get what needs to be done. I will warn you, if you go to the Finance guy and just say you want to hold prices because they are large customers, you won't get a warm reception. Do your homework, be well prepared and you may not get what you want-- but you'll get what you need.

Sell Well and Prosper tm

Nothing worse than losing money so that you're no longer a viable supplier for your clients.

They understand that. If you're concern, offer them a 6 month price freeze if they pay upfront.

Michael