Costs went up. Your price increase didn't stick

What is changing

Input costs for steel, resin, freight, energy and labour now move several times a year. A single annual price review no longer keeps pace.

Key accounts expect to negotiate every increase. They ask for evidence, delay acceptance and play suppliers against each other.

Common signs

• Supplier costs moved months ago and the price list has not caught up: SKUs are missing and legacy prices persist.
• The increase went out as one flat percentage, and key accounts negotiated it away.
• Exceptions were granted in the first week, and the rest of the market heard about it.
• Nobody can tell you how much of the announced increase reached the invoice.
• Freight, small orders and urgent deliveries are absorbed rather than charged.

Where it leads if left alone

Each increase that fails to stick widens the gap between cost and price. The shortfall is absorbed into margin, and by the time it shows in quarterly reporting the next cost movement has arrived.

The decision that is hard to reverse

Exceptions granted in the first week of an increase are the hardest to undo. The market learns which suppliers give way, and the next increase starts from a weaker position.

What recovery costs

Catching up on missed increases means asking customers for two moves at once, which invites switching. Most businesses end up absorbing part of the gap permanently.

What good looks like

• Cost movements trigger a price review automatically.
• Each segment receives an increase set by its value and pricing power.
• The sales team has dates, letters, objection handling and exception rules before the increase is announced.
• Freight, small-order and urgent-delivery charges are set by rule and recovered.
• Finance reports the net realised increase at 90 days.

What it is worth

The gain from each increase that holds carries into every later year.

Source: Pricing Insight worked example.

How it is treated

1. Size what is owed. Measure the gap between cost movements and realised price by product group and customer, including freight and cost-to-serve, and find which accounts can carry more. Strategic EBIT Opportunity & Risk Diagnostic →
2. Price the rise by segment. Use customer pricing power and SKU price position to set a different increase for each segment, with the EBIT effect shown before release. EBITDA Improvement Program →
3. Prepare the team and hold the increase. Dates, customer letters, objection handling and exception rules, then a measure of the net realised rise at 90 days. Negotiation Training & Value-Based Selling →

How Pricing Insight works

Relevant work: RBM Plastics held a price rise with a dominant customer (realised).

Experience

Ron Wood has worked in pricing for 30 years: first as a pricing and commercial manager in FMCG, building materials and capital equipment, and since 2007 as adviser to more than 160 businesses.

Method

Each engagement follows the same sequence: diagnose, optimise, embed. Recommendations rest on the client's own transaction data, and every figure can be traced to it.

Measurement

Results are measured against a margin baseline agreed with the client's finance team, and reported as realised, modelled or identified.

Continuity

Ron Wood leads each engagement from the first meeting to handover.

How much of your last price increase reached the invoice?

A first conversation establishes how this applies in your business and whether a diagnostic is warranted.

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