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More on price increase after contract signed
October 7, 2021
Price increase after contract signed follow up to article on September 28, 2021  

             Price increase after contract signed; always a risk but not until recently a very real problem.  It's not just inflation; it's most of the new economics, trade issues, environmental issues, political issues, problem getting parts and finished product.  Here is how things have changed, say in the past 10 months.  Though most alarm jobs are installed and operational within days of signing the contract, some have long delays, though delays were usually associated with builder's progress putting up multiple homes, other trades coordinating and finishing their work in large buildings before you can start on your alarm work among other issues. 
            The Standard All in One actually deals with delay and cost increase by providing that delay for more than a year will cost the subscriber an additional 5%.
            That provision may no longer be enough.  One year delays are not the only reason for price increases these days.  Product costs are scoring because of shortage, taxes, increased labor cost and material cost, cost of shipping among other reasons.  The equipment you intend to buy and install a month from now may have significant price increases within that month.
            What's the answer?  Passing the price increase on to the customer isn't that simple.  You may find that customers are not too keen on accepting a provision that requires them to assume the risk of price increase, especially without a cap, once they have a firm sale and installation price.  I suppose there could be increased expense for the after-install services, like monitoring and service, too.  So a provision that passes that cost on to the customer may be another provision that causes routine challenge. 
            Another problem with the pass-a long price increase is that you will now have to reveal the cost of the equipment, something the customer was not originally presented with. 
            We could build in automatic price increases over time; perhaps reducing the one year delay to one month delay.  Maybe a consumer price index increase.  I believe this month it's at 3.6%.  Venezuela, a socialist state, here we come.  [Venezuela's inflation rate this month is close to 3000%].  I can't even figure out how to explain how that translates to alarm equipment or labor cost increases. 
            The Standard Forms have not addressed this yet for the 2022 update.  Any ideas, let me know.  By the way, now is the time to update your contracts.  You get free update within 6 months, so you're covered not only for any updates between now and then, but price increases [though none planned as of now, but may need to pay for the legislation congress is considering for "infra structure" - someone has to, right?].  
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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301