Lately, equipment price increases seem to be coming from every direction. Inflation has been all over the news for months. Materials, labor, and shipping have been driving up supplier costs for years. And now, interest rate hikes are adding to the pressure to increase prices. Unsurprisingly, as costs rise for your suppliers, they often protect their profitability by passing the increase on to you. So odds are good that all these recent price increases have worked their way into any multi-year purchase and service agreements you have pending. And because the increases are caused by multiple different factors, it can be hard to determine the best course of action in negotiations. But even if you can’t identify the root causes of a quote’s price hike, three little words can help you dig deep and get the best possible outcome – regardless of current economic conditions:
Look. Push. Plan.
- Look in the Terms and Conditions or other fine print of the quote for a hidden price increases (it might be called an “inflation index” or a “CPI adjustment”). Before you sign, remember that small increases add up to big dollars over time: a 3% annual increase over four years is the same as a 12.5% increase upfront.
- Push back against price increases to your supplier rep. Everything is negotiable. Of course, it’s probably unrealistic to expect to negotiate down to 0% interest – but you might get agreement to a smaller increase or a shorter contract term, and that’s still a big win.
- Plan ahead. Account for equipment price increases in your budget and level-set expectations with all departments, letting them know that they should probably expect annual price increases. It’s easier for everyone when it’s not a surprise.