Strategies for passing on price increases

Passing on price increases is best achieved through a price revision clause in your contracts, transparent communication with customers, and, where necessary, renegotiation of existing agreements. However, nearly three-quarters of Dutch entrepreneurs are unable or unwilling to (fully) pass on higher costs, often out of fear of losing customers or due to fixed price agreements. Below, you will find practical strategies as well as alternatives.

Make price increases contractually possible

A major challenge is that quotations and agreements are often drawn up at lower costs and are not adjusted when costs rise. The solution: include a price revision clause in your agreements. This allows you to adjust prices based on external price increases, such as rising raw material or energy prices. You can formulate this so that an increase is only possible once a certain threshold is exceeded. Also read why you should be careful when changing an agreed price.

Keep customers on board with transparency

Transparency is crucial. Explain why you are adjusting prices and how the increase relates to your rising costs. Customers understand that businesses face rising costs and are more likely to go along with it if they feel you are honest. You can also keep customers on board by offering extra value, such as a higher service level or a new feature.

Enter into the negotiation

Renegotiating existing contracts can be an efficient way to implement price increases, but it requires strong negotiation skills and legally robust documents. Important:

• have clear, convincing arguments ready that show how rising costs make a price increase inevitable;
• Legally record new agreements correctly — contracts are binding and amending them can be complicated.

Given the complexity, it is often wise to engage a legal professional.

Alternatives to price increases

If a price increase is not feasible or desirable, consider alternatives:

• Shrinkage: reducing the size or weight of a product while the price remains the same;
• Cheaper materials or ingredients: switching to less expensive raw materials to reduce costs.

Please note: do not let the quality deteriorate too much. This can deter customers and—if you deviate from what has been agreed—cause contractual problems.

Frequently Asked Questions

Am I allowed to simply raise an agreed price?

Not just like that. An agreed price is fixed, unless your contract contains a price revision clause or you renegotiate. A unilateral increase can lead to legal problems.

What is a price revision clause?

A contractual provision allowing you to adjust prices under certain conditions, for example when a threshold is exceeded due to rising raw material or energy prices.

How do I keep customers on board with a price increase?

By communicating transparently about the reason and potentially offering additional value, such as better service or new features.

Are there alternatives to a price increase?

Yes, such as shrinkage inflation or cheaper materials. Do monitor quality and your contractual obligations.

Help with price increases and your contracts?

We help you include a price revision clause in your general terms and conditions and contracts, and assist you with renegotiation, ensuring that you implement price increases legally correctly.

View our expertise in contract law or schedule a no-obligation intake consultation.