Price increases are not a negotiation tactic, but a matter of numerical preparation | Anti-Spirituality #19

You cannot bring up a price increase.
This may not be a matter of courage,
but because you are not prepared with the numbers.

Even when raw material costs or outsourcing expenses rise,
you cannot bring up a price increase to your business partners.
This is a common concern I hear from manufacturing executives.
And in many cases, it is discussed as a problem of "courage to speak up."

However, I do not believe that price increases are a matter of negotiation tactics or courage.
I believe it is a matter of numerical preparation.
The reason price increases are not accepted is not because you lack assertiveness,
but because you have not shown "why this price is necessary"
using numbers.
Preparation for a price increase means, for each product,

building up the current cost, organizing evidence of how much material costs have risen
and how outsourcing costs have moved, and presenting a fair price with numbers.
It means turning a subjective "request" into a structural "explanation."

◤ I have seen many times the moment when a "request" turns into an "explanation"

I have been present at price negotiation meetings many times.
Through that, I have learned one thing clearly.
Whether a price increase is accepted or not is
almost decided before you even sit at the negotiation table.

There was once a company that could not bring up a price increase
to a long-time business partner.
The reason was "fear of damaging the relationship."

I understand that feeling painfully well.

I started by creating materials.
I built up the cost of the target product by process,
and put the trends of material costs and labor costs over the past few years into a single graph.
I made it visually clear that the price increase margin
was derived from facts, not emotions.

The negotiation I approached with those materials
was surprisingly smooth.
I understood the reason later.

The purchasing representative on the other side
actually wanted evidence to get the price increase approved within their company.
Materials with numbers become a weapon for the other party as well.
What was a back-and-forth argument as a "request"
turned into an equal negotiation the moment it became an "explanation."

What I prepared was not courage, but numbers that the other party could also use.

"Even if you show numbers, it won't be accepted by a party in a strong position."
That reality also exists.
Certainly, not everything will be accepted.
However, without numbers, you cannot even sit at the negotiation table.
Numbers do not guarantee a win, but they are the minimum condition to enter the ring.
With preparation, the probability of success definitely increases.

Specifically, what should you prepare?
First, break down and build up the cost of the target product by process.
Material costs, outsourcing costs, time spent on processing.
Next, list how those costs have moved over the past few years.

Create a single graph showing what percentage material costs have risen compared to three years ago.
Finally, decide how much of that increase to pass on to the price.
The full amount, or half?
Once you have this, the request for a price increase
becomes a "report and consultation," not a "request."
The other party will face the numbers, not emotions,

and you can approach the negotiation without guilt.
Preparation is also a cane that supports your own feelings.

The success or failure of a price increase is
almost decided before you sit at the negotiation table.
If you create a state where numbers are visible, the negotiation can be handled with an explanation.

Without numbers, no matter how much enthusiasm you put in, it will be a back-and-forth argument.
This is also one scene of anti-spirituality.

And to conduct such negotiations,
it is a prerequisite to visualize the current situation with numbers.
If you cannot show costs and cost trends with numbers, it is not an explanation.
That is why the development of an information infrastructure

is an essential item for the manufacturing industry today.
To be honest, I used to put off creating materials for price increases.

It was not because the work of breaking down costs by process was troublesome.
It was because if I broke them down, how much I had been missing out on
would appear in numbers.
I didn't want to see it.
While saying "I'm afraid of breaking the relationship,"
what I was really afraid of was not the other party, but my own loose estimates.
That is why I now make it a point to open up costs during normal times, not before negotiations.

From next time, I will enter into the topic of digital technology that supports those numbers.
【#19】
Episode 18

https://note.com/human_crab7218/n/ne67ac2884c59





Episode 20 https://note.com/human_crab7218/n/naa2235dcaa1c

✓ One step you can take today
・Choose one business partner you want to raise prices with,
　and build up the cost of the target product by process.
・Summarize the trends of material costs and outsourcing costs over several years into one sheet.