When the Price You Agreed No Longer Works
One of the more uncomfortable conversations in business begins with a perfectly reasonable sentence: We need to revise the price. Often the problem begins before the customer says anything — the company itself cannot explain precisely why the price has to change. “We have higher costs,” “tariffs have increased,” “the market has changed” may all be true, yet none, by itself, is a convincing commercial argument. Explaining your costs tells the customer what happened; justifying your price shows why they should accept what happens next — and repricing changes according to which customer is sitting across the table.
Repricing in a Tariff Economy — Without Losing the Client
1. The Customer With a Cheaper Alternative — The Comparer
This customer has already done the comparison. You announce a higher price. They respond with another supplier's quotation.
The temptation is to defend your increase immediately. But the first question should be different: are the two offers genuinely comparable?
Origin, specification, delivery reliability, payment terms, inspection, warranty, lead time and contractual risk all have economic value. If the competitor can genuinely provide the same outcome at a lower landed cost, your problem is not communication. Your price may simply be uncompetitive. If not, stop defending the number and explain the difference.
Price conversations become much easier when both sides are pricing the same thing.
2. The Fixed-Price Customer — The Committed
This is harder. A long-term customer agreed to a fixed price precisely because they wanted certainty. Telling them that circumstances have changed does not erase that expectation — and depending on the contract, it may not alter your legal obligations either.
So this conversation should begin with the contract, not the new price. What does it say about duties, regulatory changes, cost pass-throughs, review periods or renegotiation? Clear adjustment mechanisms can make tariff-related changes more transparent for both sides; without them, unilateral repricing can quickly become a contractual dispute.
Then consider the commercial alternatives. Perhaps the tariff burden can be shared temporarily. Perhaps volume changes. Perhaps specifications, delivery timing or contract duration can be renegotiated.
The objective is not necessarily to recover every dollar immediately. It is to prevent an economically workable contract from becoming an economically impossible one.
3. The Customer Who Is Already Under Pressure — The Constrained
This customer understands your problem because they have the same one. Their imports cost more. Their own customers resist increases. Their working capital is tighter. Now you arrive with another price revision.
Here, simply proving that your increase is legitimate is not enough. You need options.
Could a larger order reduce another cost component? Could shipment timing change? Could a different specification work? Could part of the adjustment begin now and the remainder later?
This is where commercial judgment matters most. A customer can agree that your new price is completely justified and still be unable to pay it.
Explaining your costs tells the customer what happened. Justifying your price shows why the customer should accept what happens next.
Repricing, then, should never begin with: How much can we increase? A better question is: What changed in the economics of this contract, who is carrying that change today, and what arrangement keeps the relationship commercially rational for both sides?
Five Questions Before Repricing
What exactly changed?
Separate the tariff impact from freight, supplier pricing, currency movements and your own operating costs. If you cannot isolate the increase internally, you will struggle to defend it externally.
Does the contract actually allow the price to change?
Check adjustment, tariff, duty, review and renegotiation provisions before discussing numbers. The commercial argument and the contractual right to reprice are not necessarily the same thing.
What would losing this customer actually cost?
Look beyond revenue. Consider margin, replacement time, payment history, future orders and acquisition cost. Sometimes absorbing part of an increase is cheaper than replacing a valuable account.
Can something other than price change?
Test volume, specification, shipment timing, contract duration and payment structure. A tariff creates a cost problem; it does not automatically dictate a single solution.
What evidence would you show if the customer challenged every dollar?
Prepare the calculation before the conversation. Effective cost pass-through mechanisms depend on clearly identifying eligible costs and documenting how the adjustment was calculated.
Business Clinic Principle
Never reprice a relationship merely because your costs increased. Reprice when you can identify what changed, establish who should carry the risk, and offer a commercially workable way forward.
- Repricing is not one conversation — a comparer, a fixed-price customer and a constrained customer each need a different approach, and confusing the three is the most common mistake.
- Explaining costs is not the same as justifying a price. Clear adjustment mechanisms in the contract make tariff-driven changes defensible; their absence turns a commercial issue into a contractual dispute.
- The objective of repricing is not to recover every dollar immediately — it is to keep an economically workable contract from becoming an economically impossible one, using the Five Questions before naming a number.
Atefeh Hosseini
Business Development Manager, Qasr Al Anqaa Group of Companies
Atefeh Hosseini is Business Development Manager at Qasr Al Anqaa Group of Companies.