How to negotiate a price increase with a long-standing customer

Why long-standing accounts are the hardest to reprice

The price on an old account was usually set by someone who has left. Since then your material, freight and labor costs have moved, the customer's volumes have moved, and extras have crept in: held stock, small orders, longer payment terms. Nobody wrote them down, so nobody knows what the account really earns.

The account manager who inherited it has one fear, which is being the person who lost it. So the increase goes out as a letter, the purchasing manager calls to object, and the rep halves the increase on the phone to keep the peace. The customer learns that your prices are an opening offer.

The fix is preparation. Four moves from The Salecopy Method do most of the work here: Signal, Evidence, Concessions and Options.

Signal: write down why now, for you and for them

Start with your own reason. Write one sentence that states what changed and when: a raw-material cost, a freight rate, an energy bill, or simply that this account has not been reviewed in years. If you cannot write the sentence, you are not ready to make the call.

Then find the customer's timing. Look for the date their price agreement ends, when they set next year's budget, and whether a new purchasing manager has arrived. An increase that lands before their budget is set is a planning item. The same increase after the budget is set is a problem they have to explain to their boss.

Check the notice period in your supply agreement before you choose an effective date, and have your lawyer review anything you are unsure of.

Evidence: show the cost, not your feelings about it

A buyer who hears "costs have gone up across the board" hears nothing. Bring something they can check. A published index for the material is better than your word. So is a clear statement of which products are affected and which are not.

Bring evidence of what they get as well. Pull their own order history: deliveries on time, emergency orders you turned around, stock you hold for them. Do not invent or round up. If your delivery record on this account has gaps, fix that conversation first.

Write down each objection you expect, in the words the buyer will use, and put the proof next to it. There is more on this in answer objections with evidence.

• What changed in your costs, with a source the buyer can look up
• Which product lines the increase applies to, and which it does not
• Their delivery and service record from your own system
• What you currently provide that is not on the invoice

Concessions: decide what you will trade before they ask

The buyer will ask for something. Often it is a smaller increase or a delay. If your only answer is yes or no, you will say yes. So write two columns before the call: what you can give, and what you want back for each.

In manufacturing and distribution there is plenty to trade besides unit price. The rule is that every give has a get, and the rep knows who has to approve each one. The full approach is in never concede, trade.

• A smaller increase in return for a committed twelve-month volume forecast
• A rebate paid at year end if they reach an agreed volume, instead of a lower price today
• A later effective date in return for faster payment
• Held stock or shorter lead times in return for a longer agreement
• A lower price on one line in return for fewer, larger orders

Options: set your limit and work out theirs

Write your walk-away before the conversation: the smallest increase you will accept on this account, and the terms that go with it. Below that number, decide what you offer instead. It could be a different specification, a larger minimum order quantity (the smallest order you will accept), or no more free held stock.

Here is an invented example to show the arithmetic. Say an account spends $300,000 a year and you need a 5 percent increase, which is $15,000. Your walk-away is 3 percent, which is $9,000. If the buyer offers 2 percent, or $6,000, you do not split the difference. You offer 3 percent with a volume rebate, or 5 percent with the current stock arrangement kept, and let them choose.

Then be honest about their alternative. Switching supplier costs a buyer time: samples, trial runs, approval from the engineers or operators who use the product, and a period of carrying two sets of stock. Purchasing may not have counted that. The people on the shop floor have, which is why you should know them by name before the letter goes out.

The conversation, in order

Call or visit before anything arrives in writing. A long-standing customer should hear it from a person they know.

End by asking who will confirm the new prices in writing and on what day. Then send the summary yourself the same day. A price increase the customer has not confirmed is not agreed, and you will find that out when the first invoice is disputed.

• State the increase, the reason and the effective date in the first two minutes
• Show the evidence and then stop talking
• Log each objection and answer it with proof, or say plainly what you cannot show
• Respond to any request with a trade from your list
• Agree the effective date and who updates the prices on their side

What to do on Monday

Pick the five oldest accounts that have had no price review. For each one, fill in the fields below in your CRM (customer relationship management system, where your accounts and deals are recorded). If you cannot fill them in, you have found the reason the increase has not happened.

Use an AI assistant to prepare and to practice, with the prompt below. It can draft the brief, play the purchasing manager and point out what is missing. It should not write to the customer or agree to anything. Your rep makes the call and sends the letter.

If your team needs to practice this together, the manufacturing and distribution training program spends four weeks on it.

What to add to your CRM

A prompt to try

Help me prepare a price increase conversation with an existing customer. Do not contact anyone and do not write anything for me to send yet. I will make the call myself.

Account: [customer type and how long they have bought from us]
What they buy: [products and rough annual spend]
Current terms: [prices or price list, volume tier, payment terms, rebate, minimum order quantity, lead time, any stock we hold for them]
The increase: [percent or amount, which products, proposed effective date]
Why now: [what changed in our costs, with the source]
What I can trade: [my give and get list]
My walk-away: [smallest increase and terms I will accept]

First, list anything missing from the information above that I should find out before the call. Do not guess or fill gaps with assumptions.

Then:
1. Write the reason for the increase in one plain sentence.
2. List the five objections this purchasing manager is most likely to raise, in their words, and next to each one say what evidence I have given you that answers it. Mark any objection I have no evidence for.
3. For each item on my give and get list, suggest the line I could say to offer it as a trade.
4. Check my walk-away against the trades and tell me if any trade would take me below it.

After that, play the purchasing manager so I can practice. Stay in role, push back on price and terms, and wait for my replies. When I type END, tell me every concession I made without getting something back, and whether I ended with a confirmed effective date and a named person.