Raising Prices: The Broadway Play

 

By Phil Harwood
 
In our first scene, we see Catherine “Kat”, the Contractor, facing a dilemma. She needs to raise prices on Paul, the Property Manager, but she’s not sure how to do so because Kat and Paul are in a multi-year contract. On top of that, Paul has been a long-time, loyal customer and Kat doesn’t want to mess up their relationship.
 
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Quiet on the set! And, action.

Paul (on the phone): Kat, I got your text. You said we need to talk. Is there a problem?
Kat: Nothing that can’t be solved. When can we meet? I’d like to talk about this in person.
Paul: I have to say, you have me worried.
Kat: I promise it’s nothing major. But I would like to meet to discuss in person.
Paul: I’m open for lunch today.
Kat: Great! I’ll see you then.
 
Kat (at restaurant): Thanks for meeting. Before we order, I’ll get right to it. We need to raise our prices.
Paul: But we have two more years on our current contract.
Kat: I understand. None of us could have anticipated what we’re seeing across the board – huge increases in labor costs, fuel, materials, supplies, equipment – you name it – we’re getting hit from every side.
Paul: I know. I see it too. We’re all feeling it. But we signed a multi-year agreement for a reason.
Kat: Yes, we both did. We entered into the agreement based on a set of assumptions that have shown to be wrong. That’s why we’re meeting today.
Paul: I can’t just approve price increases. What are you asking me to do?
Kat: I’m asking you to put yourself in our shoes and understand the situation we’re in.
Paul: I can’t pass along price increases to my tenants just like that.
Kat: I understand that this is not easy.
Paul: What if I can’t help you?
Kat: I hope that’s not the case, but we may be forced to exercise our rights under the 30-day termination clause in our agreement. We’re trying to avoid having to make that decision. 
Paul: You would do that to us?
Kat: We see that as a last resort and certainly hope we don’t end up there.
Paul: That would be unfortunate.
Kat: I agree. And the reality is that you would then have to hire a replacement for us at current market prices, which are the same prices we’re asking for.
Paul: Good point. And then we would have to train them to our expectations. I’m way too busy to deal with any of that, and your people are great to work with.
Kat: I know this is an extreme ask. But neither of us can ignore the realities of the situation.
Paul: Let me see what I can do.
Kat: I’ll send you over an amended agreement this afternoon.
Paul: Thank you.
 
Scene two:  TBD.
 
Now go forth.

Note: this blog was first published in Landscape Management magazine. 


Tags: Pricing , Contracts , Increased Costs ,