Published by
Throne of Profit EditorialReviewed by
William Hassell
Founder & Chief Editor, Throne of Profit
Steel is up, resin is up, freight is up, and the wage you have to pay a decent machinist is up. Meanwhile the part you have quoted the same way for six years is still going out the door at the same price. The margin is quietly bleeding, and the accounts hurting you most are often your oldest and best ones — the ones you never wanted to touch. The reason those prices got stuck isn't the customer; it's that raising them feels like a bigger risk than absorbing the cost — so you absorb it, month after month, until the job barely breaks even.
The fear driving that is real: name a number too fast and a long-held customer starts calling other shops. But quietly eating cost increases isn't loyalty — it's subsidizing your customer's business with your own margin until you can't afford to serve them at all. The task isn't avoiding the increase. It's passing it through in a way that reads as a business fact, not a shakedown, so the customer adjusts the PO instead of shopping the job.
THE COST GAP
your cost ▇▇▇▇▇▇▇▇▇▇ rising every quarter
your price ▇▇▇▇▇▇░░░░ frozen since the last quote
└──── margin you're giving away
pass through poorly → customer re-sources
pass through clearly → PO updated, account keptOwner symptoms
Your oldest accounts carry your thinnest margins, and you flinch at touching them.
Input costs have climbed for years, but several part numbers haven't moved.
You delay a needed increase for months because you dread the customer's reaction.
Why this happens
Long relationships build a kind of price gravity. The number was set once, it worked, and revisiting it feels like reopening a settled deal. On top of that, manufacturing quotes are often locked to a specific part number and a specific buyer, so an increase feels personal and negotiable in a way a posted retail price never does. Owners also tend to imagine the worst version of the conversation — the customer walking — while ignoring the slower, more certain loss of margin they're taking right now. So the increase gets deferred again, and the gap widens.
Common mistakes
Absorbing cost creep silently until the job runs at or below break-even.
Raising everything at once after years of nothing, so the jump looks alarming.
Leading with your own pressures ("we need the money") instead of the shared input reality.
Giving no notice or paper trail, so the increase lands as a surprise on an invoice.
Treating every account the same, instead of sizing the increase to the part and the relationship.
Business consequences
A frozen price against a rising cost isn't a stable account — it's a slow leak that turns your most loyal customer into your least profitable one. Left alone, it forces an ugly choice later: a large, abrupt increase that shocks the customer, or quietly cutting corners on a job you can no longer afford to run right. Either path risks the relationship you were trying to protect. The owner who passes costs through steadily and clearly keeps the margin healthy, keeps the account, and never has to make the desperate catch-up move — because there's nothing to catch up on.
How experienced operators think about it
They separate the fact of the increase from the feeling of it. The fact is mechanical: material and labor cost more, so the price reflects that — the same way the customer raises prices on their own products. Experienced operators tie the increase to something the customer can verify (a material index, a documented labor market, a freight line) so it reads as market reality rather than opportunism. They also think in terms of switching cost: a well-run account knows that re-sourcing means new tooling, new first-article approvals, and new risk — so a reasonable, well-explained increase is almost always cheaper for the customer than leaving. The goal is to make staying the obvious choice.
Practical actions
Increase early and small, on a regular cadence, rather than rarely and large — small moves are absorbable and don't trigger a re-source review.
Anchor the increase to a verifiable input — a published material index, freight, or documented wage pressure — so it reads as the market, not you.
Give real notice in writing, with an effective date, so buyers can update the PO and their own pricing before it hits an invoice.
Segment your accounts. Size each increase to the part's current margin and the relationship, not one blanket percentage across the board.
Protect the switching-cost story. Reliability, tooling ownership, and approved first articles are what make staying cheaper than leaving — lead with the value you already deliver.
Questions every owner should ask
Which of my oldest accounts now carry my thinnest margins — and when did they last move?
Can I point to a verifiable cost driver for each increase, or am I asking on faith?
If a customer re-sourced this part, what would it actually cost them to switch?
Frequently asked questions
How do I bring up a price increase without the customer immediately shopping other shops?
Frame it as a shared input reality, not a negotiation you started. Tie the change to something they can verify — the same steel, resin, or freight numbers hitting everyone in the market — and give written notice with an effective date so it feels like a business update, not a surprise. Small, regular increases rarely clear the bar for a full re-source review; it's the sudden large jump after years of nothing that sends a buyer looking. Lead with the reliability and approved tooling that make you hard to replace, and the increase reads as a cost of staying, not a reason to leave.
Should I raise prices on every customer at once, or handle them individually?
Handle them individually. A blanket percentage ignores that some part numbers are already priced well and others are deep underwater, and it ignores that your accounts differ in volume, switching cost, and margin. Start with the parts where the gap between your cost and your price is widest, size the move to that specific job, and stagger the conversations so you're not renegotiating your whole book in one exposed week.
Related articles
Running a Profitable Small or Midsize Manufacturing Business — the pillar.
Passing Material Price Swings Through to Your Prices — the mechanics of moving cost into price.
What Scrap and Rework Are Really Costing Your Shop — the hidden costs eating the same margin.
Why Jobs Take Longer Than You Quoted — the other side of the margin squeeze.
Where Time Leaks on a Typical Job — finding the cost before you price it.
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