Inventory how-to

How to handle a supplier price increase

Update the cost in your records as soon as the supplier confirms it, decide whether to pass it on to customers, and re-check your reorder quantities and minimums against the new price.

Short answer: Update the cost in your records as soon as the supplier confirms it, decide whether to pass it on to customers, and re-check your reorder quantities and minimums against the new price. A price increase does not change how much you sell per day, but it can change how much stock you want to carry and whether current order quantities still make sense.

Confirm the details first

Get the increase in writing: the new cost per unit, the effective date, and whether it applies to open purchase orders or only new ones. Suppliers sometimes apply increases only to orders placed after a certain date, so check if you can get a last order in at the old price before it takes effect.

Decide your pricing response

Work out your new margin at the higher cost and decide if you raise your retail price, absorb the cost, or find a cheaper alternative supplier. If you raise prices, update them in your store before the new stock arrives so you are not selling at a loss on day one of the new cost.

Re-think order size and timing

A higher cost per unit raises the cost of carrying stock, so it is worth asking if you still want the same days of cover for that item. Some stores shrink order quantities on expensive items and reorder more often instead of holding large buffers. Check your case pack and minimum order requirements still make sense at the new price, since a big minimum at a higher cost ties up more cash.

Keep records straight

Note the old and new cost somewhere you can refer back to, especially if you need to explain margin changes later or compare supplier quotes. If you use multiple suppliers for the same product, this is also a good moment to compare their prices again.

Step by step

  1. Get the price increase confirmed in writing with an effective date
  2. Check if you can place one more order at the old price
  3. Recalculate your margin and decide on a retail price change
  4. Update your retail price before new stock arrives
  5. Review whether order quantity and days of cover still make sense at the new cost
  6. Check case pack and minimum order quantities against the new price
  7. Record the old and new cost for future reference

Worked example

Say you sell a kettle that costs you $20 and you sell it for $40. Your supplier raises the cost to $24. At the old retail price your margin drops from 50% to 40%. You decide to raise the retail price to $44 to hold close to your original margin, and you update the price in your store the day before the new stock is due to arrive, so you are not selling old-cost stock at a loss.

How SteadyShelf helps

SteadyShelf does not track landed cost or manage pricing, so updating product costs and retail prices is a manual step in your store admin. Where it does help is after the fact: once lead time and safety days are set per supplier, it will still give you an order-by date and suggested quantity based on sales, so you can decide order size with the new cost in mind rather than guessing.

$29/month flat, unlimited products and suppliers, 30-day free trial. Run the numbers now with the free reorder point calculator.

SteadyShelf is launching on the Shopify App Store. Join early access to get the install link first.

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FAQ

Should I buy a large stock of the old-price inventory before the increase hits?

Only if you have the cash and storage for it and you are confident you will sell through it. Buying ahead ties up money and shelf space, so weigh the savings against how fast that item actually sells.

What if the price increase makes a supplier's minimum order quantity unaffordable?

Talk to the supplier about a smaller minimum, or compare the total cost against an alternative supplier even if their unit price is slightly higher. A lower minimum at a higher unit price can still be cheaper overall once you account for tied-up cash.

Let SteadyShelf do this math for every SKU

Order-by dates per supplier, seasonal forecasts and draft POs for your Shopify store. $29/month after a 30-day free trial.

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