Negotiating For Cost Of Living Price Increases
A client recently wrote asking about submitting a price increase on a janitorial contract he had serviced for six years. He inquired, trusting that my advice and consulting would be beneficial from my 45-years in the cleaning business.
If you neglected to include cost of living increases in the original contract, you’ll probably eventually reach a point where you want to negotiate for a price increase.
Start by communicating to the customer indirectly that you would postpone a price increase if it resulted in reopening the bid. You would accept the loss rather than risking loss of the account. Your main appeal could be that you desire to give a pay raise to your helpers. You believe it is unfair to delay well-deserved merit increases to your staff.
When you don't pay your staff well, they may go elsewhere, and the new replacements you hire (at a lower salary) may not always be the cream of the crop. By paying a top salary, you attract the best workers. That is always win-win for you and the customer.
You can average the exact cost of living increases over the period that you did not increase the contract, then add the totals and multiply that times the monthly billing. This will show the total amount that you have under-billed.
Consider showing the account a flyer of a cleaning product that went up the most in price, and share the percent of increase. This further substantiates that costs have been escalating without compensation on your part. This consigns more weight on your side of the table, justifying a price increase.
Gary Clipperton is an author, consultant, trainer and developer of software and training programs for the cleaning industry. He is a 45-year industry veteran and as president of National Pro Clean travels to assist contractors and facilities with any cleaning challenges. His website, https://nationalproclean.com, offers free advice as well.