Negotiating a Price Increase Down

C1 Level · Procurement · Commercial Negotiation

Procurement · Dewey 658.7

First Thoughts

A strategic supplier has written formally to announce a 9% price increase effective next quarter, citing raw material inflation. The business cannot absorb that. Your own CFO has already been clear: the ceiling is 4%.

The supplier is strong — they know you would struggle to switch quickly. But they also do not want to lose a multi-million-pound account. Your job is to close the gap from 9% to 4% without triggering a walk-away on either side.

Take a moment with each question below. Share as much detail as you like — specific examples, what you would actually say, what tripped you up last time.

1. What is the real leverage in a negotiation like this? Your volume? Your relationship? Your options?

2. When a supplier leads with a big number, what are they actually telling you about their own position?

3. Is there a difference between negotiating and haggling in a strategic relationship?

4. How much transparency should you offer about your internal constraints? Too little or too much?

Quick opener — pick whichever you prefer:

  • You have sixty seconds before the call. What is your opening line — knowing they’ve led with 9%?
  • A procurement director once said: “The goal isn’t to win. The goal is to keep the supplier motivated and protect the margin.” What does that look like in practice?

Key Vocabulary

Eight words and phrases you will actually use in this conversation. Click each card to reveal the meaning, then say the word aloud and try to use it in a sentence from your own experience.

a price increase / upliftA rise in the unit price a supplier charges. Standard in procurement conversations.
pass-through costsCosts a supplier claims to be simply passing on — for example, raw materials, energy, freight.
volume leverageThe negotiating strength that comes from the size of the business you give the supplier.
a framework agreementA longer-term commercial deal that governs pricing and terms for a defined period.
indexationLinking a price to an external measure — e.g., a raw material index — so increases are transparent, not discretionary.
to benchmarkTo compare a supplier’s pricing against the market or against alternative suppliers.
a counter-proposalA structured response to an offer — not just a different number, but a different shape of deal.
to walk awayTo end a negotiation because the terms are unworkable. A real option is stronger than a threatened one.

Use the vocabulary — speak in full sentences:

  • Pick three words from the cards. Use each one in a sentence about your own work.
  • Which two are the most useful to you right now? Which one is the hardest to remember? Why?
  • Which one of these words would you never say out loud to a client? Which would you use with a colleague but not a client?

Gap-fill 1

“We’d like to replace a flat 9% increase with an ____ mechanism tied to the published raw material index.”

Show Answer
indexation — Moves the negotiation from a fixed number to a transparent formula — a sophisticated move.

Gap-fill 2

“Before we settle on the uplift, I’d like to walk through the ____ costs you’ve listed and separate them from margin.”

Show Answer
pass-through — Signals you will scrutinise, but professionally — not aggressively.

Key Language

Useful chunks of language for this conversation. Read each phrase aloud and think about when you would actually reach for it.

Opening — professional and firm

  • “Thanks for the formal notice — we’ve reviewed it carefully, and I’d like to walk you through where we are before you quote us on next year.”
  • “I want to come into this conversation as a partner, not a purchaser — but I also need to be direct about what is and isn’t going to be workable.”
  • “Before we talk numbers, can I share what my business is seeing on its own side? That will help frame what’s possible.”

Testing the case for the increase

  • “Can we separate the pass-through costs from margin for a moment? I want to make sure we’re both looking at the same breakdown.”
  • “The raw material index you’re referencing has moved 3.8% in the period. Help me understand how that becomes a 9% ask.”
  • “If the underlying index reverses next quarter, does the increase come back down on the same basis?”

Making a counter-proposal — with structure

  • “What I’d like to propose is 4% this year, indexed thereafter, within a two-year framework.”
  • “I’m not asking you to give up margin for nothing — I’m asking to reshape the deal so the increase lands where the cost actually is.”
  • “If we can agree the indexation, I’m prepared to lock volumes at current levels for the full two years.”

Closing — preserving the relationship

  • “I’d rather spend two more weeks getting this right than push either of us into something we regret.”
  • “You have my commitment that, whatever we land on, we honour it and we communicate early if anything changes.”
  • “I don’t want to be the account that walks at 9%. I want to be the account that found the number that worked for both of us.”

Try these out

Use at least one phrase from each group above in your answers to the mini-tasks below.

1. Open the negotiation in thirty seconds — you’ve just sat down.

2. Counter the 9% figure with a structured alternative, in two sentences.

3. Handle the moment they say: “That’s simply not possible for us.”

The Scenario

The situation: A scheduled face-to-face negotiation at the supplier’s head office. You are the category lead. They have formally notified a 9% price increase effective Q3. Your CFO’s ceiling is 4%. You spend roughly £12m/year with them. Switching is possible within six to nine months but painful. Their commercial director is across the table — professional, experienced, not bluffing.

Your task: Close a deal that lands at or below 4%, with an indexation mechanism for future years and a two-year framework in return for volume commitment. Do this without threatening to walk if you would not actually walk, and without damaging the relationship.

Your response should include:

Step 1 · Plan your response

Use the timer. Make notes — do not write full sentences. Think about what you will say first.

Strategy time: 10:00

Step 2 · Deliver

When you are ready, role-play the conversation out loud. Be ready to handle the follow-up questions below.

Follow-up questions to handle:

  • That’s simply not possible for us — 4% doesn’t cover our cost.
  • If you’re so sure about the market, go to tender — we’ll see who else meets your specification.
  • We’d need a three-year commitment, not two, for anything close to 4%.
  • Can you sign this off today, or do you need to check with your CFO?

Reflection

The most important part. What did you notice, what surprised you, what will you try differently next week?

1. Which of the follow-ups tested you hardest? What would you say differently next time?

2. Where in the conversation did you feel the pull to concede, and how did you hold the line?

3. What is the difference between negotiating hard and negotiating badly?

4. If you had to teach a new buyer one rule about price-increase conversations, what would it be?

Looking back at today:

  • Two negotiation phrases you will keep ready for the next commercial call.
  • One move you will stop making because it concedes too early.
  • One habit you will change in how you open a price-increase negotiation.