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Manufacturer changes prices after PO has been accepted, acceptable?
One CMO tripled lab testing costs and increased batch costs after we had submitted a PO with the old pricing.
Then they bill us for the new prices, should I demand to get the price that was initially implicitly agreed on submitting the PO?
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7 Replies
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Yes. That’s ridiculous. If you browsed a supermarket based on the listed prices then got to the cash register and they rang up differently, you’d insist on the listed price. If you agree to a certain price, you can’t increase it because you see a demand.
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So, they changed their pricing? The old PO reflects the old pricing?CM’s and Consultants will review their pricing structures every year and it is not uncommon for them to sometimes raise prices, especially if they are far below market prices. While not a great practice, it is their right.For example, last week I was contacted by a client from several years ago. In that time my prices have risen. I did not honor a 4 year old price quote.Ultimately you might have to use a different CM. Have you addressed this with your Sales Person? -
Thanks for the feedback!
Sendt PO with the old pricing, wasn’t told pricing had changed. 2 months later after having delivered all materials to CM and them making the batch, they send me an invoice with new pricing.
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Ok, that is a different story. They should have invoiced you at the start. It prevents these issues. The real question is are you a large enough of an account to exert any pressure on the CM? In most cases the answer is usually no.
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How old was the PO with the old pricing? Sounds like both parties are at fault here … sending in an aged PO and expecting things to be the same … not a good business practice. And, the CM accepting a PO with outdated pricing not advising of a price change.
I have a feeling we’re not hearing the whole story here … the truth is generally somewhere in the middle.
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If your CM provides chemicals to manufacture your product and 2 months passed between the time you issued PO and the time you sent your components or chemicals it is possible they got a price increase on anything they provided. In that case I believe they should pass on any increases. You can’t expect them to absorb increases in raw material. Also many times customers ask for some extra packaging to be done from the last order and assume it will be done at the same price.
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Mark/David: It took 2 months between sending the PO and receiving the invoice with the new pricing. We delivered all raws and packaging materials within 2 weeks of the PO.
Pricing was also recently updated to reflect a new packaging step so not sure what you mean by aged. CM should have notified me that pricing had changed after receiving the PO or honored the PO for this batch. Or do you think we need to ask for verbatim confirmation of pricing with each PO issued?
CM was in this case also behind schedule. In any case, not a big enough amount to make a fuzz about, but interested in what you think about confirming all PO pricing upon issuance.
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