Page 30 - PWM2023_April

BETTER BUSINESS

Tools to

recoup costs

Increasing general inflation, rising input prices,
changes to taxation, demands for more pay – just
some of the challenges that businesses, print or
otherwise, are having to cope with, by Adam
Bernstein hat with the with the Retail Price Index; that
W prices increase by a specific

pandemic and
percentage at certain points in time;
Brexit, all in all,
or it may set out specific intervals at
this decade has
become, so far,
one to forget and which a printer can ask to change
prices.
it’s patently clear that print must get However, for the sake of
on with whatever is thrown at it. commercial harmony, he advises that
So, in a world of high inflation, “any price review clause should give
how can firms protect their position? the customer the option to accept
Can printers increase prices – if so, and that in the absence of
how? Can contracts be unilaterally acceptance, the contract will either
ended if they’re uneconomic? And automatically continue at the revised
will the courts intervene to cancel a price or potentially terminate”. His
loss-making deal? point is that while price increases
Printweek spoke to a commercial may be necessary, unilateral, and
lawyer and the BPIF for advice. The unexpected, increases can leave a
key message is that all is not lost and nasty taste in the mouth.
that there are practical steps that Of course, the nature of a printer’s whilst protecting the supplier from a potentially unprofitable contract.”
printers can take to protect work will determine which approach And where customers will only accept a fixed price, then the only option
themselves, particularly when is the most suitable. Regardless for the printer is, as Maguire says, “to try to factor in anticipated increases
negotiating new contracts. though, Maguire says that new to the cost of raw materials so that it can continue to be profitable.”
Pete Maguire, partner and head of contracts should always have a price Duration is important
commercial at Wright Hassall review inserted into a supply
contract – even if it’s not used. And Allied to a price review clause is the need to consider the duration of the
It’s about price for existing contracts, he contract. No supply contact can operate forever. And so, Maguire highly
For Pete Maguire, the path to recommends checking to see recommends examining the length of any supply contract. Indeed, he says
success involves having good whether any clause currently exists that “at the moment, [print] suppliers are likely to find it more beneficial to
contracts and so, understandably, before thinking about attempting to try and limit the length of a contract until the cost of raw materials
when it comes to increasing prices – renegotiate. stabilises; this will give them more flexibility to renegotiate terms on a
regardless of whether changes are It follows that he thinks that more regular basis”. The flip side to this, is, however, that customers may
made – his first piece of advice to printers should avoid fixed price see this as introducing volatility and that may drive them elsewhere for
ensure that there’s a price review agreements to allow flexibility over contract fulfilment. In other words, firms need to weigh up the risk of
clause in place. changing circumstances. However, losing their existing customers in return for pricing flexibility to hedge
He comments that such a clause Maguire often sees customers against exposure to rising costs and potential loss of business.
“may link to a specific raw material hesitate to accept this because of An alternative for Maguire is to look at inserting a termination for
and any increase in its price or be price uncertainty. This said, he says convenience clause. In describing how this works, he says that “it
more general in scope”. But as to how that “inserting a procedure for effectively allows a reduced notice period to terminate an agreement to
it might work, it may, for example, determining the price should provide limit any hardship if the cost of raw materials becomes so high that the
specify that prices increase in line the customer with some comfort contract is no longer profitable”. He adds: “This clause should, if possible,

28 PrintWeek MENA April 2023 www.printweekmena.com