The Straits Are Closing: Why You Need a Pricing Plan This Week

I usually try to focus on positive reasons for increasing prices or improving the clarity of your value communications. Not this month. 

Why?

The world has shifted.

Following USA and Israeli military action against Iran, the Iranian government has closed the Strait of Hormuz – the narrow waterway through which roughly 20% of the world's oil supply flows every day. Not to be outdone, the USA has applied a similar blockade to Iranian shipping traffic. The effects are already working their way through the global economy, and they will reach your business faster than you might expect.

Energy prices are rising sharply. But oil is not just fuel – it is also a feedstock for plastics, packaging, synthetic materials, and a vast range of industrial chemicals. Fertiliser, which also transits the strait in significant volumes, is becoming more expensive, which means food costs will follow. Jet fuel is becoming scarce, which means both air freight and business travel will cost more. Supply chains that depend on oil-derived inputs – which is to say, almost every supply chain – face a combination of cost inflation and intermittent shortages.

Even if you are a pure service industry selling knowledge or expertise – professional services or consultancy, for example – general inflation will inevitably lead to wage inflation. No one will be untouched in the coming months

For businesses in the UK, the exposure is particularly acute. The UK economy is unusually sensitive to energy price movements. UK businesses should expect inflation pressures to arrive earlier and be higher than in some other markets.

The time to plan your pricing response is now – not when the next invoice lands.

Exposure Mapping 

Before touching the price list, map your exposure.

List the ten inputs that matter most to your margin – or if not ten, whatever is the appropriate number for your business. For each, write down: how much it contributes to your total cost, whether it is directly or indirectly exposed to energy, oil, packaging, fertiliser, freight or currency movements, how much stock or supplier cover you have, and what price trigger would force action.

This does not need to be complicated. A one-page table is enough. The point is to stop treating inflation as a general problem and start seeing exactly where your commercial risk sits. A business with three months of stock, fixed supplier pricing and low fuel exposure can behave very differently from one buying weekly, shipping internationally and working on thin gross margins.

Universal Principles: Before You Look at the Numbers

Regardless of what you sell or who you sell to, there are six things worth thinking about immediately.

1. Stop rounding your prices

If you round your prices – £50, £65, £100, £500 – then these are psychologically harder to increase because any move feels like a step-change to the customer. If you normally charge £65 (for an item, per hour, whatever) then changing to £70 feels obvious and significant to the customer/client. A price of £97 or £148 or £483 can be nudged upward with far less friction. If your pricing is currently rounded, adjust it to a precise figure now, before the inflationary increases begin. It will make the whole process of increasing prices easier going forward.

2. Psychological pricing

If you haven’t already done so, read my blogs (or even my book) covering things like Price Relativity, The Power of Zero, Price Anchors, or price Abstraction. You might have heard me talk about these at a conference, or read about them before, but not yet acted on them. Now would be a good time to think about changes, you’re going to need all the help you can get. 

3. Volatility is in the news

Most customers and clients are aware of what is going on in the world. They are expecting prices to increase. And if your customers are part of a supply chain or sell to businesses/consumers then they will be having discussions with theircustomers about price increases. Don’t be afraid to address the issue.

4. Recover margin, not just cost

If years of competitive pressure have eroded your margins to a level that no longer reflects the true value of what you deliver, do not limit yourself to passing on your cost increases pound for pound. This is a legitimate opportunity to restore some of what was lost.

I want to emphasise, this is not a suggestion that you engage in price gouging. Even if I thought that was ethical, and I don’t, it might earn you extra profit now but it can collapse your business when things return to normal and your customers remember how you acted.

A price that reflects genuine value – even if it is somewhat above your pure cost-plus calculation – is defensible right now in a way it rarely is in calmer times. Be honest with yourself about what a fair margin looks like, then aim for it.

5. Not every price change has to be permanent.

Where the cost pressure is volatile and visibly external, a temporary surcharge, freight adjustment, energy levy or indexed review can sometimes be fairer and easier to explain than a permanent list-price increase. The key is to make the mechanism clear: what has triggered it, how it is calculated, when it will be reviewed, and what would cause it to reduce or disappear.

Handled well, this can protect margin without making customers feel that you are using a crisis as cover for a hidden price rise. Handled badly, it becomes the kind of mysterious extra charge that destroys trust. So if you use a surcharge, give it rules and a review date.

6. This is often a time to compete harder

A strong temptation when input costs are rising and your own margins are coming under pressure is to try to reduce your own costs, and the two easiest budgets to take money out of are HR and Marketing. But be careful about the impacts of doing so, especially with regard to marketing – this could be a real opportunity, because if your competitors are winding back their activity then you can take market share. If you have the cash to invest in stock, for example, then when everyone else is running out and letting customers down you could continue to service them. That builds loyalty which remains in place even after things settle down again.

Preparation Before Pricing Decisions

Segment Your Customers

Before you do anything else analyse your customer base. You should choose the criteria to segment your customers that’s appropriate for your business, but as an example (for a personal service) it might be a) profitability, b) length of relationship, and c) ease of doing business.

The amount by which you pass on price increases can then vary. Longstanding profitable customers who are a pain to work with might get a higher price increase than those who are easy to work with, even if the easy ones are slightly less profitable.

If you split each criterion into low and high (e.g. for length of relationship, low = new and high = longstanding), you then have 8 combinations of low and high…

For each combination decide straFor each combination decide strategically how you want to handle that customer.

Brief the team before you brief the market

Do not let the first real test of your pricing plan happen in front of a customer.

Before prices change, brief everyone who might have to explain them: sales, account management, customer service, finance, operations, reception, delivery teams and anyone who answers the phone. Give them the same short explanation, the same escalation route, and the same rules about what they can and cannot agree.

Customers forgive price increases more readily than inconsistency. What frustrates them is being told one thing by the website, another by the salesperson and a third by accounts receivable.

Check Your Contracts

Next, and before you communicate anything externally, check what you are actually allowed to change.

Some businesses will have contracts, framework agreements, price guarantees, renewal terms, marketplace rules, or quote-validity periods that limit how quickly prices can move. Others will have made informal promises to customers that now need to be handled carefully. The commercial answer might be obvious, but the contractual answer may not be.

This is not about becoming timid. It is about avoiding a messy situation where the sales team says one thing, finance says another, and the customer produces an old email promising fixed prices until September. Know your constraints before you start the conversation.

Negotiating

Regarding the advice below, where you are actually going to talk to a customer/client, I strongly recommend reading my blog on negotiation from February 2025.

Practical Guidance by How You Sell

The what of pricing is largely universal. The how depends almost entirely on the nature of your selling relationship. I’m going to address this in four main contexts.

Repeat Selling Products at a Distance

This covers things like ecommerce (D2C and D2B), catalogues, online marketplaces, subscription boxes, and SaaS with published pricing pages.

When customers buy without a human conversation, the pricing change itself does the communicating – so presentation is everything.

1.        Act quickly and cleanly. Update your prices in one go rather than drip-feeding changes across your range. Incremental changes encourage customers to monitor and compare. To be crystal clear, I am not saying you can only update prices once – you might need to do so several times if your input costs continue to go up. The advice is to avoid having different price increases on different lines every day.

Note that this section is headlined ‘Repeat Selling Products at a Distance’. That’s because customers frequently visit your website for the same product or a range of products regularly. If your sales are infrequent then customers don’t notice frequent price changes, so you can more easily adjust individual lines.

2.        Use a transparent banner or announcement. Don’t try to ‘hide’ the price increases. A short notice on your website or in a transactional email – one or two sentences explaining that global supply conditions have driven a pricing review – will reduce cart abandonment and churn more than silence will. Customers who understand the why are less likely to feel deceived.

3.        Protect your most price-sensitive segments carefully. If you have tiered pricing or a free entry point, consider holding those anchor prices while moving mid and upper tiers. This preserves your acquisition funnel while recovering margin where customers have already demonstrated they will pay. And if you haven’t already, then this is definitely the right time to be clear about the value difference between tiers to protect higher-tier sales.

4.        Review your bundles and minimum order quantities. Bundles that made sense at old costs may now be margin destroyers. This is a good moment to restructure what is packaged together and at what threshold free shipping or discounts kick in.

This is also a chance to offset costs to help the customer. Let’s say you sell an item, which you receive in boxes of 24. You normally split the box into individual units. That takes time to unpack, extra shelf space, time to repack into orders, etc; if you haven’t already offered pack options, you could sell all 24 at once, either by creating a new SKU or having a special x24 price. Even if you already do this, a thorough analysis of your range to identify additional opportunities would help your customers.

And of course, if you do this, tell your customers how you are trying to help them.

There are some exceptions to the four suggestions above.

First, if you use dynamic pricing, you don’t need to change anything other than the parameters of the model to account for increased input costs.

Second, if you price based on competitor prices in real time (such as using Pricefy or PriceHunter), you can just let the same algorithms run because you will continue to follow the market. However, now is the time to be incredibly vigilant regarding margins – it is entirely possible that some competitors do not understand their net margins, and they let their prices drop below net positive average profitability. In other words, they start losing money. Do not follow them!

Selling Products in Person or Through a Sales Team

This includes field sales, trade counters, B2B account management, wholesale and distributors.

When humans sell to (or deliver the service to) other humans then conversations are critical. Handle it well and you strengthen the relationship; handle it poorly and the price increase becomes a grievance that lingers long after it is absorbed.

1.        Tell your best customers first, in person or by phone. If you have segmented them, these best customers would be high profitability, high longevity, and high ease of working with, and perhaps some combinations of any two of those. Never let a key account find out about a price increase through an invoice or a price list update. Call them, explain the situation honestly, and give them a lead time – typically 30 to 60 days – before the new pricing applies. This is not weakness; it is respect, and it is remembered.

2.        Arm your sales team with language, not just numbers. Your salespeople need to be able to explain the increase confidently and briefly. Give them two or three clear sentences – referencing the Strait of Hormuz, energy input costs, and any specific materials relevant to your products – so the conversation does not feel improvised. Use this as an opportunity to remind the customer of all the value they receive.

Last month’s (March 2026) blog about professional services includes advice on structuring the communication.

3.        Create an objection bank and approval rules. Give the team a short objection bank before the conversations begin. Write down the five or six responses they are most likely to hear, such as: “Your competitor is cheaper”, “We need you to hold the old price”, “We cannot pass this on”, “We have no budget”, “This feels opportunistic”, and “We need twelve months’ certainty.” Then agree the approved response to each.

Also agree who has authority to make exceptions. In a volatile market, uncontrolled exceptions are dangerous because every one of them becomes a precedent. The team needs confidence, but they also need boundaries.

4.        Don’t apologise. That’s usually the instinct when delivering bad news. Resist this.

5.        Anticipate the ask for a lock-in. Some customers will try to secure current pricing for six or twelve months because they need stability. This is entirely understandable, but it transfers all risk to you. Discuss this internally and have a clear policy before the conversations begin. If you do decide to agree to fixed prices, price your product or service accordingly to protect yourself as much as possible.

6.        Offer choices instead of concessions. When a customer pushes back, the answer should rarely be a straight discount. A better response is to offer choices. If the current level of service, speed, flexibility, stockholding, payment terms or senior attention is valuable, it should be priced accordingly. If the customer needs a lower price, ask what can change: volume commitment, lead time, delivery frequency, payment timing, scope, specification, support level, or contract length.

That changes the conversation from “Can you make it cheaper?” to “What version of this do you need?” It protects margin and makes clear that price is connected to value, not simply to your willingness to concede.

Selling Services at Distance

Examples are subscription software, online platforms, retainers billed without regular contact, and automated renewal services.

Services sold at arm's length occupy a tricky middle ground: the customer has a relationship with the product, not a person, so a price change can feel impersonal and arbitrary unless you work hard to contextualise it.

1.        Give meaningful advance notice. A 30-day notice period is a legal minimum in many contexts; if you are able to offer 45 to 60 days then you are helping your customers, and you can bring this to their attention. This gives customers time to budget, reduces panic cancellations, and signals that you are treating them as adults rather than trying to slip the change past them.

2.        Make the email personal. Again, read my previous blogs on communicating price increases. Don’t write an email that reads like an impersonal legal notice (“It is with regret that external circumstances mean we have to reassess our prices”!) Write it in plain language, explain the external environment briefly, and connect the price to the ongoing investment you are making in the service. If you have improved the service recently, this is the moment to remind them.

3.        Segment your customers and communications. Decide on the appropriate pricing and communication for each. One size does not fit all. Long-tenure customers deserve a slightly different message than those who joined recently. Acknowledge loyalty where it exists. If you have worked hard to maintain existing prices then make sure they understand how and by how much you have been helping them.

4.        Consider a grandfather period for the most loyal. For a subset of long-standing customers, a 90-day grace period at current pricing, communicated privately, converts a potential cancellation moment into a loyalty signal. The cost is modest; the goodwill is disproportionate. Think of it as a marketing cost.

Selling Services in Person

Such as consultancies, agencies, professional services, tradespeople, freelancers, therapists, coaches, any service where you meet or speak with clients regularly

This is the context where the price conversation is hardest – precisely because the relationship is warm and personal – and where it matters most to handle it with care.

Again, this is the time to reread (you did read it the first time, didn’t you?) my blog about price/fee rises for professional services from March 2026.

And again, segment the customer base

1.        Have the conversation, do not send an email. For any client who represents meaningful revenue, the price change should be communicated face to face or, at minimum, by phone. An email signals that you are uncomfortable with the conversation; clients notice this. A direct, calm, confident conversation signals that this is a normal business matter – which it is.

2.        Frame it in terms of the relationship's future, not its past. Rather than justifying the increase by reference to how long you have held prices (which sounds like an apology), talk about what you intend to deliver going forward. "I want to make sure I'm able to continue giving this engagement the attention it deserves" is more compelling than "I haven't raised my rates in two years."

3.        Name the number clearly and then stop talking. One of the most common errors in fee conversations is filling the silence after the number is stated. Quote the new rate, wait. The client's first response is rarely their final position, and unnecessary elaboration weakens your position.

4.        Prepare for pushback without pre-empting it. Do not offer discounts or concessions before they are asked for. If a client pushes back, acknowledge the concern – "I understand that's an increase and I want to make sure it makes sense for you" – and then restate the value, calmly. Have a clear sense in advance of what, if anything, you are willing to negotiate, and what you are not.

5.        Use this moment to clear out underpriced legacy work. Most long-term service relationships contain at least one piece of scope that has crept beyond the original brief at no additional cost. An inflationary pricing review is the natural moment to define the scope of the engagement, not just apply a percentage uplift to an increasingly inaccurate rate card.

6.        Offer choices instead of concessions. This is identical to the advice above in “Selling Products in Person or Through a Sales Team”.

After the Price Increase

Measure what happens after the increase.

Track more than revenue. Watch gross margin by product, service line or client; order frequency; average order value; conversion rates; churn; payment delays; complaint themes; discount requests; and competitor movements.

A price increase can look successful in the first month while quietly damaging repeat purchase behaviour or sales conversion. Conversely, you might lose some sales but actually be making a higher net margin because of the higher prices.

The aim is not to panic at the first objection. It is to learn quickly. In a volatile market, pricing should be deliberate, monitored and adjustable – not improvised and then forgotten.

The Bottom Line

The closure of the Strait of Hormuz is not a temporary headline; it is a supply shock that will flow through energy prices, raw material costs, food prices, and logistics for months at minimum. Even when it opens it will take time for tankers to be reallocated to new jobs, or for refineries to be restarted. Businesses that act now – building precise prices, communicating clearly, and treating this volatility as the opportunity it genuinely is – will emerge in a stronger margin position than those who wait for the pressure to become unbearable and then act in a panic.

Your customers already know costs are rising. Give them the courtesy of an honest, confident conversation, and most of them will meet you where you need to be.tegically how you want to handle that customer.

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