Blog

Businesses are feeling the impact of rapidly rising fuel prices, with petrol averaging over $3 per litre nationwide and some stations in Auckland briefly reaching $4, driven by global conflicts that have pushed crude oil prices past USD $100 per barrel and disrupted key shipping routes. These increases flow directly into freight, deliveries, supplier pricing, and everyday operating costs, making it harder for business owners to maintain margins while keeping prices fair and transparent for customers. 

Everything is shifting, often faster than your quoting process can keep up. But with the right systems, pricing can be something you manage proactivity rather than reactionary. 

What can you do? 

1. Understand How Often Your Input Costs Are Changing 

Many suppliers now adjust prices regularly, and some publish scheduled notifications of upcoming changes. Others increase prices based on market movements with little notice. 

What to do: 

• Understand the contractual arrangements in place and terms and conditions agreed with your suppliers with regards to the pricing structures. 

• Keep a simple register of your major inputs (materials, consumables, freight, fuel, etc). 

• Track how often your suppliers update these prices weekly, monthly, quarterly. 

• Set up internal reminders to review and update your pricing based on this rhythm. 

If your material prices charged by suppliers move every month, but your quotes to customers are valid for three months, you are exposed to greater risk. This could end up eroding your gross margins. A clear process can help protect your business:  

2. Add Expiry Dates and Clear Conditions to All Quotes 

When costs move quickly, outdated quotes can erode your profitability. 

A simple fix is to include wording such as: 

“This quote is valid for X days from the date issued. If accepted after this period, the final price will reflect our current material and labour rates at the time of acceptance.” 

This keeps things transparent and ensures customers understand that price movements are driven by the market, not arbitrary decisions. 

When a Quote Is Accepted Late 

Send a friendly, clear confirmation: 

“Thanks for accepting the quote. As this falls outside our standard acceptance timeframe, today’s material and labour rates apply. Your revised price is $X. Please confirm within four hours/ seven days  so we can secure materials at current market rates.” 

You stay professional and supportive, while protecting yourself from further price increases. 

3. Build Strong Internal Processes Around Cost Tracking 

If your pricing changes frequently, your internal process must be sharp. 

Here’s what works well: 

• Identify your top 10 key inputs (e.g., steel, aluminium, gas, freight, consumables). 

• Review pricing weekly, yes, weekly during volatile periods. 

• Have your finance or operations lead issue updated pricing guidance to your quoting team. 

• Ensure a second pair of eyes reviews any significant adjustments before they go live. 

This keeps your whole team aligned and ensures consistency across quotes. 

4. Apply Fuel Surcharges Fairly and Transparently

Fuel costs influence both your own deliveries and those of your suppliers. Many industries now apply a standard fuel surcharge to keep things balanced. 

How to calculate a fair surcharge: 

1. Identify your baseline month (e.g., January). 

2. Look up national weekly fuel price data to calculate how much prices have risen since then. 

3. Choose your method:  

4. Option A: Calculate the increase as a percentage of your monthly delivery related costs and apply it as a percentage based surcharge. 

   Option B: Divide the increased cost by the typical number of deliveries to create a flat fee per delivery. 

5. Review and adjust regularly, fuel moves quickly. 

This approach gives you a clear, databased method that’s easy to explain to customers. 

Note: MBIE is undertaking weekly fuel monitoring, you can utilise the weekly fuel price data to assist you with your surcharge calculation: here. 

 5. Review Your supplier Contracts Carefully 

1. Understand the contract terms. If you’re locked into large fixed price contracts (where the price remains constant for a defined contract period) and your input costs have increased.

2. Consider how often prices can be reviewed, what are the triggers for supplier price increases and what is the notice period for price changes?  

3. Does the contract include cost escalation clauses. Are there limits on price increases? Do you have rights to approve or reject these increases? 

4. Is there a force majeure provision covering major external events (e.g geopolitical disruptions)?

5. If you have a variable / indexed pricing understand how price fluctuates could impact the gross margin. Where this is based on inflation indices such as CPI or a Commodity indice (e.g., fuel, metals) then assess the cost impact of an increase of indice by doing a basic sensitivity analysis ie +/- 5% or 10% in a highly volatile market. 

6. Understand the impact of foreign exchange if you are purchasing in another currency. How is your business exposed to significant movements in the exchange rates and what measures can you put in place to protect against this?.

7. Cost-plus pricing where the supplier charges actual costs plus an agreed margin.  

8. Do your price commitments align with volume commitments and delivering on your work to customers?. 

For new contracts, consider including these protections going forward. It’s far easier to negotiate these before work starts.  

6. Understand your customer arrangements. Can you pass cost increases onto customers? 

1. Contract Terms 

         Check whether your contracts with your customers allow for:  

1. Price increases (e.g. annual review clauses) 

2. Cost passthrough (e.g. supplier cost or CPI increases) 

3. Notice periods before changes take effect 

2. Timing 

Price increases are often applied:  

1. At contract renewal 

2. After giving required notice 

3. When a costchange threshold is reached 

3. Impact of market conditions 

This is easier when:  

1. Cost increases affect the whole industry 

2. Demand is strong 

3. Customers have limited alternatives 

This is harder in highly competitive or price sensitive markets 

4. Assess the extent of the Increase 

Options include:  

1. Passing on the full increase 

2. Sharing the cost increase (partial passthrough) 

3. Temporary surcharges instead of permanent price rises 

5. Understand your value positioning 

   1. Strong value, quality, or service makes increases easier to justify 

   2. Weak differentiation limits price flexibility  

7. Keep Communication Open, Clear, and Customer Focused 

While pricing increases aren’t fun for anyone, most customers understand the world is changing. Clear communication builds trust. 

Here’s what helps: 

• Explain why adjustments are necessary and why costs have risen. 

• Be transparent about cost drivers and your efforts to control costs. 

• Give customers notice wherever possible 

• Keep your tone supportive and solution focused 

Remember: customers appreciate honesty and clarity far more than surprises. 

Bringing It All Together 

Managing pricing in a fastmoving environment isn’t easy, but with the right processes, you can stay ahead of the curve. 

Here’s your quick action checklist: 

1. Understand the legal terms and conditions in your supply contracts and committed purchase orders. 

2. Track supplier price movements regularly 

3. Add expiry dates and clear conditions to all quotes 

4. Confirm late accepted quotes with revised pricing 

5. Implement a fair fuel surcharge 

6. Review and protect fixed price contracts 

7. Understand the legal terms and conditions in your customer contracts and ability to   change sales orders. 

8. Keep customers informed with clear, friendly communication 

9. Empower your quoting team with weekly pricing guidance 

By staying proactive and transparent, you protect your margins while continuing to deliver great service, something every business owner appreciates. 

If you require the support of the Unlimit team with your pricing, get in touch!