In mid-September, J.B. Hunt's CFO told a room full of investors at an industrials conference that third-quarter earnings would come in below the second quarter. Diesel had just gone past $6 a gallon, and his explanation, as reported afterward, was "a timing mismatch because intermodal fuel surcharges reset with a lag." The stock dropped hard the next day.
I keep thinking about that one. J.B. Hunt is about as good at pricing as a freight company gets, it has a surcharge mechanism built for exactly this situation, and the lag still ate a quarter. Most mid market manufacturers writing a B2B price increase letter for 2027 are working with a lot less than that: somebody in FP&A, a template from three years ago, and probably 60 days before January.
Get the number right before anyone writes the letter
Most increase letters spend three paragraphs on the valued partnership before they get to the part anyone reads. The buyer skips straight to the percentage, forwards it to someone in their finance group, and that person asks one question: why this much? Every procurement team I dealt with when I was selling asked some version of it, often in the first email back.
So build the answer first. One page per product line showing what a unit cost you in 2026, what you expect it to cost in 2027, and which inputs moved it. If the numbers on that page don't hold up, I'd wait on the letter until they do.
Then sanity-check it against everyone else. The Richmond Fed's CFO Survey, out September 23, has finance chiefs expecting 2027 prices up 3.0% at the median and unit costs up about the same. That's the typical company planning to pass its costs through and stop there. Asking for 8% is fine if your cost page backs it up, but "inflation" by itself only covers about three points of it, and buyers know that too.
They've also been reading the same data you have. The ISM report for August had purchasing managers paying more for the 23rd month in a row, with aluminum, copper, diesel, freight, resins and several kinds of steel on the list of things going up. So your letter won't shock anyone, although after two years of "rising costs" from every supplier they have, that phrase on its own doesn't get much of a reaction anymore.
What goes in a price increase letter to customers
Less than you'd think. The new price or percentage, broken out by product line if it differs. The effective date and what happens to open orders and outstanding quotes. One or two drivers stated specifically enough to survive a procurement meeting, something like which input went up and by how much. And a real person's name and phone number, ideally the rep they already know.
Skip the apology and the partnership paragraph. Be careful with promises to roll back a tariff-driven increase if the tariff goes away, too. Procurement keeps these letters, and a sentence like that tends to get quoted back to you the following year.
How much notice before a B2B price increase?
Read the contracts before anyone drafts a word. A lot of supply agreements set the notice period (usually somewhere between 30 and 90 days) or tie increases to an index or cap them, and your biggest customers are almost certainly on their paper, not yours. Pull the top 20 accounts and write down the price clause and notice period for each, plus when the contract renews. It's an afternoon of work, and I'd be surprised if it didn't change your plan.
After the contracts, look at the customer's calendar. Plenty of your buyers are locking their 2027 budgets in October. Show up in December and you've blown a hole in a number they already defended to their own boss, which is a rough way to start the year with them.
Surcharge or a straight increase?
A surcharge tied to a published index looks like the fair option, and buyers do accept it more easily because it can come back down. But it only protects you if it resets fast enough, and that was J.B. Hunt's whole problem in September. Reset monthly on a cost that jumps weekly and you end up financing the gap yourself for a month at a time.
My rough take, which your contracts may overrule: use a surcharge for the one volatile input that dominates your cost, reset it as often as customers will tolerate, and put everything that isn't coming back down (wages, insurance, the freight contracts you already signed) into the base increase. Buyers get irritated, fairly, when they work out that a commodity surcharge has wage inflation tucked inside it.
Watch your competitors while you're at it. In the briefings we build for manufacturers, some of the most useful peer items are competitors admitting on earnings calls that costs are running ahead of their price increases, since that usually means their own letter is coming. You can listen to those calls yourself, or have a free first briefing flag them for you. We went further into this in reading a competitor's pricing through their cost cuts.
Tell your sales team before you tell customers
The quickest way I know to kill an increase happens on the phone, the morning the letter lands. The buyer calls their rep, and the rep either hasn't heard about it or says something like "yeah, finance is making us do this." Now the buyer thinks it's negotiable, and you've got a long month ahead.
So walk sales through the cost page a few days before anything goes out. Tell them where the floor is, if there is one, and who's allowed to approve an exception (one person, and not whoever the customer happens to call first). I carried a quota for eleven years, and I'd have taken a half-hour cost walkthrough from finance over a beautifully written letter every single time.
CFOmarketIQ tracks the outside news that moves a mid market company's costs and prices, and your first briefing is on us.
Questions CFOs ask about B2B price increase letters
How much notice should you give customers before a price increase?
Check the contract first, since many supply agreements set a period somewhere between 30 and 90 days and big customers often have their own terms. With no clause, try to land before the customer locks next year's budget. For a lot of B2B buyers that means sending in October for a January increase.
Should a price increase letter explain the reason?
Yes, but keep it short. Name the one or two inputs that moved and about how much they moved for you. "Rising costs" persuades nobody after two years of everyone saying it. A specific driver gives the buyer something to repeat to their own finance team, and that's usually what gets it approved.
Is a surcharge better than a price increase?
Sometimes. A surcharge tied to an index works for one volatile input like steel, aluminum or diesel, and customers accept it more easily because it can fall. It only protects you if it resets quickly, though, and it's the wrong tool for wages or anything else that won't come back down.
What if a big customer refuses the increase?
Decide your floor before the letter goes out, because working it out live with a buyer is where margin tends to disappear. Trades that protect margin without cutting the headline price include a longer contract, a phase-in over two quarters, volume commitments or an index-linked surcharge. If they still refuse, work out what serving them at the old price really costs you before giving in.
A note on all of this: it is general information, not financial, legal or tax advice. Run anything you plan to act on past your own advisors first.