Supplier upping his prices?

Discussion in 'General Business Forum' started by columbo, Feb 3, 2019.

  1. columbo

    columbo UKBF Regular Free Member

    332 72
    One part of my business involves having industrial components repaired.

    I've been using a supplier for the 10 years who is quite simply excellent.

    Great success rates for the most complex repairs. Extremely responsive - emails answered within 20 minutes. Phone calls always answered.

    I really appreciate this quality level of service. However lately, he has been upping his prices by around 25% sometimes 35%.

    What are my options here?

    Do I be that awkward customer here that every supplier hates by questioning every job
    OR
    do I just raise my own prices?
     
    Posted: Feb 3, 2019 By: columbo Member since: Jan 27, 2013
    #1
  2. atmosbob

    atmosbob UKBF Ace Free Member

    3,866 869
    Increase your own prices.
     
    Posted: Feb 3, 2019 By: atmosbob Member since: Oct 26, 2009
    #2
  3. Mr D

    Mr D UKBF Legend Free Member

    16,177 1,803
    Use a different supplier or pay the prices and increase your own to cover the extra cost.
     
    Posted: Feb 3, 2019 By: Mr D Member since: Feb 12, 2017
    #3
  4. AstEver

    AstEver UKBF Contributor Free Member

    56 6
    Learn about the reason behind the increases first.
     
    Posted: Feb 3, 2019 By: AstEver Member since: Jan 10, 2019
    #4
  5. Awinner2

    Awinner2 UKBF Regular Free Member

    343 66
    As you have been totally satisfied for many years then this is a supplier to stick with. Build in the rises into your own prices but do ask them why the rises?
     
    Posted: Feb 3, 2019 By: Awinner2 Member since: Aug 4, 2017
    #5
  6. cjd

    cjd UKBF Legend Full Member - Verified Business

    15,447 3,073
    If you've been using them for 10 years you should have the kind of relationship with them that you can ask them why this sudden large change. I'm surprised actually that they haven't spoken to you about it first actually. But I suspect the answer won't help you much.

    I really don't think messing them about being difficult will get you anywhere either.

    If it was me, I'd be getting some prices from competitors and giving them a bit of work to see how they get on.

    If there's not much in it as far as price goes, you stick with the supplier you trust and try to put your own prices up if you can.
     
    Posted: Feb 3, 2019 By: cjd Member since: Nov 23, 2005
    #6
  7. AstEver

    AstEver UKBF Contributor Free Member

    56 6
    This is exactly why you should speak to them and learn about the reasons. The supplier's substantial increase without having a conversation with you in advance indicates something wrong in the business relationship.

    Are they going to increase the prices again in six months? And again next year?

    In my opinion, you have to know exactly what is going on before raising your prices.

    Are you going to inform your clients about the increase?
     
    Posted: Feb 3, 2019 By: AstEver Member since: Jan 10, 2019
    #7
  8. Mr D

    Mr D UKBF Legend Free Member

    16,177 1,803
    Do you by any chance inform your customers of reasons for raising prices? Do you inform them that your prices may go up again?
     
    Posted: Feb 3, 2019 By: Mr D Member since: Feb 12, 2017
    #8
  9. AstEver

    AstEver UKBF Contributor Free Member

    56 6
    In general terms, if it is a B2B client and I have a good business relationship with them that I want to maintain or develop, then yes, I do inform them.
     
    Posted: Feb 3, 2019 By: AstEver Member since: Jan 10, 2019
    #9
  10. Mr D

    Mr D UKBF Legend Free Member

    16,177 1,803
    Great.
    Unusual in my experience. Both in the businesses I've worked for and the businesses I've used as suppliers.
     
    Posted: Feb 3, 2019 By: Mr D Member since: Feb 12, 2017
    #10
  11. AstEver

    AstEver UKBF Contributor Free Member

    56 6
    I believe that such an approach is a characteristic known in business science as Competitive Supply Chain Network.
    I remember that my first employer (a furniture distributor) did the same, so I would say that it is not my phantasmagoria :)
     
    Posted: Feb 3, 2019 By: AstEver Member since: Jan 10, 2019
    #11
  12. Mitch3473

    Mitch3473 UKBF Regular Free Member

    1,032 244
    You must be a pretty good business client of his and he is obviously busy due to the points you laid out. Sit down and have a chat, see if he'll negotiate a favourable deal/price ( assuming you are decent in return, pay your bills on time etc etc). No harm in asking and I think he will be more than happy to keep you on board. I've had this done to me and it makes good business sense otherwise he runs the risk of loosing you and I doubt after 10 years with you he'll want to find your replacement.
     
    Posted: Feb 3, 2019 By: Mitch3473 Member since: Aug 25, 2011
    #12
  13. AstEver

    AstEver UKBF Contributor Free Member

    56 6
    It is also possible that the supplier's Key Account Management strategy tells them to 'fire' you as their client and the heavy price increases are the way to do it.
     
    Posted: Feb 3, 2019 By: AstEver Member since: Jan 10, 2019
    #13
  14. Karimbo

    Karimbo UKBF Ace Free Member

    1,684 169
    I presume the supplier gets his stuff from China/far east. Due to the fact that the pound has taken a battering I'm guessing he has no choice but to increase his prices.
     
    Posted: Feb 3, 2019 By: Karimbo Member since: Nov 5, 2011
    #14
  15. HFE Signs

    HFE Signs UKBF Ace Full Member

    1,089 149
    Talk to them and find out the reasons, see if you can negotiate a better price due to your long relationship, if not you have to increase your prices to maintain your margin.
     
    Posted: Feb 4, 2019 By: HFE Signs Member since: Feb 17, 2011
    #15
  16. pentel

    pentel UKBF Regular Free Member

    418 67
    We have had something similar with one of our suppliers a while back.

    He had not changed his prices for 8 years and had realised that he was now making a loss. He did have a discussion with me about what had happened and increased hid prices by around 25%, which was still competitive. He remains a supplier 3 years later.
     
    Posted: Feb 5, 2019 By: pentel Member since: Mar 12, 2011
    #16
  17. Mr D

    Mr D UKBF Legend Free Member

    16,177 1,803
    You don't like the answers?
    Give your own.

    Don't mind people's experience.
     
    Posted: Feb 5, 2019 By: Mr D Member since: Feb 12, 2017
    #17
  18. Flankaaa

    Flankaaa UKBF Contributor Free Member

    36 2
    As HFE Signs noted, I also think that you should try to find out what is real reason for such price increases. I am a bit concerned if your supplier is not is some sort of problems. Anyway, you would need either to negotiate discounts or increase your prices in order to sustain your margins
     
    Posted: Feb 22, 2019 By: Flankaaa Member since: Dec 23, 2018
    #18
  19. columbo

    columbo UKBF Regular Free Member

    332 72
    Thanks guys for all those great responses...

    I think his prices increases have just been the result of inflation...he has not raised them in years. I need to up my prices now and talk to him regarding any significant price changes.

    Thanks.
     
    Posted: Feb 24, 2019 By: columbo Member since: Jan 27, 2013
    #19
  20. Millerd

    Millerd UKBF Newcomer Full Member

    28 6
    Establish a basis for pricing going forward so you are both have the same understanding and then there will be no surprises. Things like inflation and exchange rate changes should be easy to build into a model.
     
    Posted: Feb 24, 2019 By: Millerd Member since: Feb 24, 2019
    #20