Finance Tools
Supplier Price Increase Negotiation Savings Calculator
Estimate how much you save annually by negotiating a lower supplier price increase versus the proposed increase.
Estimate how much you save annually by negotiating a lower supplier price increase compared with the supplier’s proposed increase.
Your annual purchased units from the supplier.
Current negotiated unit price.
Lower than proposed → saves money vs the proposed outcome.
If you can raise customer prices, some of the increase is passed through.
Annual cost
Before: $4,800,000
Proposed: $5,376,000
Negotiated: $5,136,000
Negotiation savings
Savings vs proposed: $240,000
Savings per unit: $0.40
Savings = proposed cost − negotiated cost
Absorbed cost (after pass-through)
Proposed absorbed increase: $403,200
Negotiated absorbed increase: $235,200
Absorbed savings: +$168,000
Absorbed increase = increase × (1 − pass-through rate)
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This compares the supplier’s proposed increase vs your negotiated increase. If you can pass some costs to customers, the ‘absorbed’ portion shows what hits your margin/cash directly.
How it works
- Compute baseline annual cost from purchases/spend.
- Apply proposed vs negotiated increases to get two “after” outcomes.
- Savings = proposed cost − negotiated cost.
- Optional pass-through shows how much increase is absorbed vs passed to customers.
FAQ
What if the supplier raises price in multiple steps?
Use a weighted average increase or run multiple scenarios.
Is pass-through required?
No. It’s optional and mainly helps interpret the margin hit.
How to use this supplier price increase negotiation savings calculator
- Choose input mode: units + unit price, or annual spend.
- Enter the supplier’s proposed price increase (%) and your negotiated increase (%).
- Optionally enter pass-through rate (%) to model how much of the increase you can pass to customers.
- Compare annual cost under proposed vs negotiated terms and see your savings.
Example
You buy 600,000 units/year at $8. Supplier proposes +12%, negotiated to +7%, pass-through 30%.
- Annual cost before = 600,000 × 8 = 4,800,000
- Proposed annual cost = 4,800,000 × 1.12 = 5,376,000
- Negotiated annual cost = 4,800,000 × 1.07 = 5,136,000
- Negotiation savings = 5,376,000 − 5,136,000 = 240,000
- Absorbed cost (with 30% pass-through) = increase × (1 − 0.30)
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