Clients are asking us every day: “How can we derisk contracts in the face of tariff uncertainty when our largest customers demand fixed pricing over multiple years?” Large organizations regularly use their size and buying power to pressure smaller companies into Long-Term Agreements (LTAs) with fixed pricing for three years or even longer.

Cue the internal panic. Tariffs feel like sand shifting beneath your feet, and you’ve just limped out of the last LTA where price escalation chewed up your margins like a woodchipper. You might feel like your only choices are to say yes and hope for the best or walk away and kiss 30% of your revenue goodbye. But is there another way?

Tariffs Aren’t Special

Tariffs are simply this year’s volatility villain. In the early days of the pandemic, it was freight and sea container rates exploding. Before that, material shortages squeezed margins. Next year? Your guess is as good as mine. The point isn’t tariffs; it’s uncertainty. Protecting your pricing against uncertainty is the real challenge. So how do you handle it?

Build Escalation Clauses and Escape Hatches

Escalation clauses. Index ties. Surcharges. Contingency add-ons. You don’t need a crystal ball to know costs will rise. You need contract language that gives you room to breathe. Ok, fix the price, but also incorporate language that allows you to float an adder on top of your fixed pricing under certain conditions or tied to certain indices. If possible, include clauses in your fixed pricing agreements that allow renegotiation when market conditions get weird. Because they will get weird.

Negotiate from Your True Power

Too many sellers freeze when a big customer uses the word “require,” as in, “We require a long-term fixed price.” And too many say, “Okay.” Stop. You don’t “have to” do anything. You’re not at the buyer’s mercy. You can say yes, you can negotiate, or you can walk away. But operating as if you have zero choice in the situation locks you into peddler mode.

If you’re different, better, uniquely capable of providing X, Y, and Z, then act like it. In this case, you don’t have to be a price taker. You can be a price maker. Price from that position of strength. Push back. Insert escalation mechanisms. Ask for terms that make the deal sustainable. Because if it isn’t sustainable, it isn’t a good deal.

But Be Real About Your Leverage

This isn’t permission to swagger blindly. If your offering truly isn’t different from competitors, or different enough, your options narrow dramatically.

In a undifferentiated space, it’s a no-win game of chicken, waiting to see who will shoot themselves in the foot first, locking in fixed pricing for three years. If even one of your competitors would do that bad deal, your choices are limited:

• I will also accept that bad deal or
• I will not.

There’s only so many degrees of freedom. And if the customer is 30% of your revenue, you might be stuck with a challenging LTA in the short term while you urgently build differentiation and diversify your customer base.

But if you’re losing money on every shipment, how long are you going to keep it up? You can’t make it up on volume. That’s not a strategy; it’s a slow bleed.

There’s No Silver Bullet, But There Is a Smarter Way

If you’re negotiating LTAs with customers who dominate your revenue stream and hold all the cards, your best short-term play might be to protect what you can while you quietly build an exit strategy. Diversify your customer base. Innovate. Find your niche. Become special. And then? Rewrite the rules of engagement.

If you’ve already established your value, own it. Don’t cower. Don’t collapse. Price like the powerhouse you are. Because you weren’t made for mediocre margins.