Supplier price increases
Discussion
Every time i seem to get a letter from a supplier, it seems to be about their prices going up by 4-10% due to fuel/raw material/transport/euro costs. Our cardboard box prices have gone up by nearly 20% in the past year!
Is eveyone else getting these letters each week, or are they all just charging us!
Is eveyone else getting these letters each week, or are they all just charging us!
You’re lucky you’re getting letters!!
The issue is a wider one and not really a problem. The downside to low inflation is that it’s difficult to justify increases in prices to clients. Our fees have remained pretty much the same for the past 5 years – we’ve grown because we’ve got better at what we do and are able to spend less time doing it yet deliver increasingly better services.
A way round the current issue of cost increases that is so far working well for us is to separate out the costs of things like travel from our contract price quotations. Previously, we’d taken the view that to charge for things like plane, train, milage, etc was petty and should be covered in the overall project management fee.
Rather than put our hourly rates up, we’ve left them as they are but quote for “travel costs” at cost value + 2% handling. This way, we are not the bad guys as clients can see where the increases are coming from – the whole thing becomes much more transparent.
Obviously, not right for all businesses but works for us!
The issue is a wider one and not really a problem. The downside to low inflation is that it’s difficult to justify increases in prices to clients. Our fees have remained pretty much the same for the past 5 years – we’ve grown because we’ve got better at what we do and are able to spend less time doing it yet deliver increasingly better services.
A way round the current issue of cost increases that is so far working well for us is to separate out the costs of things like travel from our contract price quotations. Previously, we’d taken the view that to charge for things like plane, train, milage, etc was petty and should be covered in the overall project management fee.
Rather than put our hourly rates up, we’ve left them as they are but quote for “travel costs” at cost value + 2% handling. This way, we are not the bad guys as clients can see where the increases are coming from – the whole thing becomes much more transparent.
Obviously, not right for all businesses but works for us!
I've had some of our suppliers split it the way you mention. e.g. one has added an increase surcharge for the euro exchange rate - if this improves they will remove it.
For years couriers have had a fuel surcharge they add, and it it only this that has been increased at the moment which does make the justification for rises more transparent.
For years couriers have had a fuel surcharge they add, and it it only this that has been increased at the moment which does make the justification for rises more transparent.
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