Price increases: Negotiating the inevitable

By The Gap Partnership

With commodity prices soaring and uncertainty infusing our global markets, having a clear strategy in place for negotiating the inevitable round of cost price increases is critical. Read their simple guide to the main watch outs and learn about their calculator which helps you instantly quantify the value of any potential price increase.

Despite a drop in vegetable oils in June, the indices for all major food commodities have risen continuously in the past year, with overall growth nearly 40% higher than the same time last year. This is the biggest increase since 2011.

Crude Oil is showing a similar trend, with consequent impacts on transport, shipping and packaging, all of which will continue to create pressure on suppliers to increase prices.

As we start to envisage a future after COVID, we all start to take stock of where we are. Even before the pandemic, we observed a number of years of supplier cost absorption and continued raw material pressure (particularly oil-derivatives) squeezing margins.

Regardless of the socio-economic circumstances, there comes a point when taking a price increase is an irresistible decision; and one which will have long reaching consequences.

In this situation, the decision can create angst, particularly in organizations in which annual CPIs is not the norm and especially where it has been a number of years since a CPI has been delivered.

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