Editor's Note: Distributors Adjust to Price Increases

Key Takeaways:
• Navigate jan/san price increases with a strategic margin-protection plan.
• Avoid blanket commercial cleaning supply price increases by evaluating each customer account individually.
• Protect customer loyalty by communicating early and selling distributor value beyond price.

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Across all industries, product and equipment manufacturers are increasing prices to offset rising costs for raw materials, tariffs, shipping, staffing, insurance, and utilities. In jan/san, manufacturers are traditionally slower to raise prices, often exhausting their own cost-cutting efforts before passing increases along.

Take a chemical manufacturer, for example. Most will take a closer look at everything that goes into getting a product to market: bottles and caps, packaging, freight, pallets, labels, and the logistics and fuel surcharges associated with obtaining raw materials. They may consider lower-grade supplies or purchasing materials in bulk to keep costs down, but even small increases can quickly add up when you're dealing with large quantities. And that's before evaluating the product inside the container and the labor costs associated with developing and manufacturing it.

With growing volatility in the supply chain, distributors have already seen—or will soon see—price increases. They, too, will make adjustments to absorb what they can, but some increases will inevitably need to be passed down. It's important to be strategic about how that's accomplished.

When it comes to raising prices, jan/san distributors need to protect margins without damaging customer relationships. Industry manufacturers actually recommend reaching out to negotiate pricing, rather than automatically accepting announced increases. Strong supplier relationships, timely payments, purchasing volume, and multiple vendor options can all create leverage.

If an increase is inevitable, economists recommend avoiding a blanket, across-the-board adjustment. Instead, evaluate the total customer relationship, considering profitability, competitive pricing, and perceived value. Distributors may be able to absorb some of the additional costs on selected products when the overall account remains profitable, while passing the full increase through elsewhere.

Communication is equally important. Give customers advance notice, explain the manufacturer's reason for the increase honestly, and never let a customer discover a higher price for the first time on an invoice.

Most importantly, distributors must remember to sell value, not just price. Use conversations with customers to reinforce the value of services such as dependable delivery, inventory management, product expertise/training, and problem-solving. For particularly price-sensitive customers, distributors can consider gradual increases, temporary margin adjustments, or additional business opportunities to help offset the impact.

Higher costs make people uncomfortable, which is why it's important to make thoughtful pricing decisions that protect profitability and the level of service that keeps customers coming back. By staying proactive, communicating clearly, and continuing to demonstrate value, distributors can navigate price increases while strengthening customer relationships for the long term.

Corinne Zudonyi has been in the commercial cleaning industry for over 20 years and is proud to serve as Editor-In-Chief of Contracting Profits (the official publication of BSCAI), Facility Cleaning Decisions, and Sanitary Maintenance (the North American media partner of Interclean Amsterdam) magazines, publications that serve the professional cleaning industry. Additionally, Corinne manages CleanLink.com, the leading digital resource for the commercial cleaning industry, and she uses her industry knowledge to steer educational topics for Clean Buildings at NFMT East. 
Corinne is the sole U.S. representative to serve on the international Interclean Amsterdam Innovation Jury, where she weighs in on product trends impacting commercial cleaning on a global scale. She also works closely with Healthy Green Schools & Colleges to advance healthy and sustainable cleaning in educational facilities. As a member of the CLEAN Awards Jury, through Building Service Contractors Association International, Corinne also helps recognize cleaning contractors and their companies for outstanding service to the industry. 
Corinne can commonly be found moderating industry panel discussions, presenting education, and focusing on bringing awareness and affirmation for the wonderful work that people do to keep facilities clean and building occupants safe and healthy. 
Follow Corinne on LinkedIn here.