The supplier writes: "from next month, 8% more." Before you accept or refuse, do not rush to haggle — first work out which kind of increase this is.
Three kinds of increase, three very different things
A pass-through increase. Raw material, exchange rate, energy or labour genuinely moved, and he can tell you by how much. It is usually a sector-wide move, not something aimed only at you.
A follow-the-crowd increase. The whole trade has raised prices and he raises his too, but he cannot say which specific cost moved. Here there is room to negotiate.
A make-up increase. He quoted low before to win the order and now wants the money back. Three signals give it away: a large increase, very short notice, and "cost pressure has been heavy lately" as the explanation.
Order of judgement: the basis first, then the timing, then the scope.
Check three things first, then negotiate the price
One: the raw material. Ask which material is going up and check its public price trend. If he cannot say which one it is, make him pin it down before you go further.
Two: the exchange rate. If the argument is the exchange rate, compare how far the local currency has moved against the US dollar over the past few months with the percentage he is asking for.
Three: the timing. This is the most overlooked point: is the increase on new orders, or on orders already confirmed? Raising the price on a confirmed order is not a market problem, it is a credibility problem.
Five things you can negotiate (ranked by value for effort)
| What to negotiate | How to put it | When it fits |
|---|---|---|
| Lock-in period | Accept this time, but agree there will be no increase for the next 3–6 months | A pass-through increase, and you expect to keep buying |
| Split delivery | The increase applies to new orders; the old ones ship first at the previous price | A make-up or follow-the-crowd increase |
| Change the specification | Same function, different material, gram weight or packaging, to recover the cost | A large increase, and the function can be substituted |
| Change the payment method | A higher deposit in exchange for a concession on price | Useful when the supplier is tight on cash |
| Volume for price | Commit to a quarter's or a year's volume in exchange for tiered pricing | You have confirmed demand ahead |
Of the five, the first one worth negotiating is the lock-in period: the worst part of an increase is not that it comes once, but that it comes every quarter.
Where you don't concede
On orders already confirmed (PI, contract or deposit paid), the price does not move.
Hold that line and everything else is negotiable. Lose it, and the price you quote your customer and the margin you have already worked out can be wiped out at any moment — and you cannot do business that way.
The next line down: an increase with no notice period, nothing in writing, and communicated only by phone.
One test: it can be explained (there is a basis) + it is announced in advance (there is a notice period) + it does not reach back (confirmed orders are not touched). All three met, negotiate; one missing, do not accept yet; two missing, start looking for alternatives.
A price increase is not the problem in itself. The problem is the increase that is not explained, the one announced at the last minute, and the one that reopens closed accounts.