Ask HN: What to do about key supplier TRIPLING their prices at short notice? | Hacker News Reader

Ask HN: What to do about key supplier TRIPLING their prices at short notice?

6 pointschristudor8 comments

Hi HN,

I am hoping some of you may be able to offer your advice on this on, as I imagine it's a fairly generalised problem. The specifics of the issue aren't actually that important, so I'm not going to include company names or any other identifiable details.

My company has a contract with an essential supplier who I pay several hundred dollars a month for a particular service. This service is absolutely essential to my product. The original contract was for a year, and comes to an end in the next two weeks.

Today, I was told that I am a legacy customer, and need to be put on a new plan. This new plan costs $10,000 a year, i.e. about triple the price I am currently paying. Given the timing of this price hike, I simply don't have time to find an alternative supplier before my contract runs out.

What can I do?

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To me, the place to start is with the consideration that if a key vendor isn't turning a healthy profit then that key vendor is likely to go away. The second thing to do is run the numbers and determine if the new pricing means shutting down your business, seriously impacts the odds of future success, or is rounding error.

The third thing, is to act on the results of your analysis and if it's not time to shutter the doors come up with a plan for mitigating the effects of the dependency.

From the vendor's point of view, your company wasn't pushing a renewal deal through and therefore the vendor's revenue stream has been uncertain. It is also possible that over the past year the vendor has repositioned itself toward a different scale of customer and is taking their product in a different direction.

Maybe the cost can be passed along: http://jacquesmattheij.com/Double+your+price+%28and+no%2C+I%...

Negotiate for a shorter contract ($4000 for 4 months), find an alternative supplier.

Post the actual details of the product on a website aimed at entrepreneurs and tech-savvy people (aka "hackers"). Someone might see a good business was opportunity, and you'll have yourself a new supplier.

What you do is provide some unique value and commoditize the @#$% out of everything you depend on.

Could these suppliers be competing with you? How essential is your part to the combination of whatever you do plus their service?

More details (but still anonymized) could help give better advice.

I guess first question should be: What makes you think you will find an alternative supplier at a much cheaper price at all?

The general solution is to renegotiate your contract further in advance, so that you have time to find an alternate supplier.

Pay them...

UserVoice?

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