Nick Boyer, senior director, strategic consulting EMEA at Conga PROS, argues that those who treat pricing as an isolated task risk watching their margins erode.
Pricing across the UK healthcare supply chain is under pressure. Energy costs are unpredictable. Labour is more expensive. This has been compounded by regulatory complexities that have increased as a result of Brexit. Supply chains have adapted, but disruptions have not disappeared. For manufacturers that rely on imported parts or raw materials, exchange rate shifts add further uncertainty.
At the same time, healthcare cost inflation remains high. At 10.6% in 2025, the UK sits among the highest in Western Europe. Although there has been some easing in specific areas, the wider picture is still one of strain.
NHS budgets are stretched, and waiting lists remain long. Some services depend on local authorities that are facing their own funding gaps, adding to a system already under pressure. Suppliers, however, are still expected to hold prices steady even as their own costs increase.
The issue is not just rising costs but the speed at which they move. Many pricing models were built for stability. Today’s market is not stable. When costs shift month by month, but contracts lock prices in for years, the risk sits largely with the supplier. Margins tighten. Forecasting becomes harder. Decisions become reactive.
When stability meets volatility
Much of NHS procurement is designed to create certainty. Framework agreements, multi-year contracts and fixed pricing structures are intended to protect public finances. That approach makes sense in principle.
In practice, however, prices are often agreed long before a contract is signed. From bid submission to final signature, inflation, currency shifts and policy changes can alter the cost base significantly. By the time the agreement goes live, the original assumptions may already be out of date.
Suppliers usually try to price this risk into their bids. It is a delicate balance. Be too cautious, and the contract is lost. Be too aggressive, and margin is eroded for years.
Many frameworks link annual uplifts to a standard inflation index and require adherence to fixed rate cards. That offers limited flexibility if labour costs jump or compliance requirements increase. In areas such as advanced imaging or AI-enabled diagnostics, where research investment is high and technology evolves quickly, the gap between fixed prices and real costs can widen quickly.
The quiet erosion of margin
Margin rarely disappears overnight. More often, it fades between renewals.
In healthcare, that erosion can be tricky to spot. Profitability may differ by product, region or contract structure. Some organisations only see the impact when they carry out a detailed review, sometimes years into an agreement.
Where pricing, quoting, and contracting data sit in separate systems, visibility is often quite limited. Finance sees one set of numbers. Sales sees another. Legal holds the contract terms. By the time concerns surface, the organisation may already be tied to unfavourable conditions.
NHS contracts can also include mandatory templates, specific clauses and detailed service obligations. If the final agreement contains commitments not fully reflected in the pricing model, those obligations remain fixed. In a low margin environment, that matters, because even small uncosted requirements can remove what little profit was built into the deal and cannot easily be recovered once the contract is signed.
When pricing, quoting and contracting operate in silos, inconsistencies follow.
Sales teams may agree on terms that sit outside approved frameworks. Quotes may drift from agreed rate cards. Contracts may rely on outdated templates or be amended without a clear record. Multiple versions circulate, which can lead to delays.
In healthcare, governance can be heavily scrutinised. Procurement cycles are complex and involve many stakeholders. Disconnected processes slow progress and make compliance harder to demonstrate.
More importantly, they make it harder to take full control of margin. If pricing decisions are made without sight of contractual obligations, or if legal terms evolve without checking financial impact, coherence is lost. Over time, that can undermine both profitability and trust.
A more connected approach
A more resilient model treats pricing, quoting and contracting as one joined-up commercial process.
Products, pricing rules, margin targets and contractual commitments should sit within a clear framework. Pricing strategy needs to reflect realistic cost forecasts and competitive pressure – sales teams need defined guardrails that align with NHS frameworks and internal policy. Contracts must reflect what has been approved and quoted, supported by a transparent audit trail.
The goal is clarity, and technology can help with this, particularly where data is fragmented. When a price is agreed, it should be consistent with strategy, compliant with procurement rules and sustainable over the life of the contract.
Responding to cost pressure does not mean pushing risk onto customers. Often it comes down to structure. Separating elements with volatile costs, such as third-party services, allows for more targeted indexation. It means being upfront about what sits behind the price, instead of quietly building in extra margin just in case something goes wrong. For healthcare suppliers, that means tighter internal coordination, clearer commercial rules and greater discipline in how deals are approved and documented, creating a stronger foundation for sustainable performance.
Adapting to a new reality
UK healthcare will likely remain financially constrained. Innovative suppliers may struggle to demonstrate value within fixed payment rates and cost-effectiveness thresholds. Yet innovation is essential if outcomes and productivity are to improve.
Static pricing models are increasingly out of step with this environment. NHS procurement is unlikely to abandon stability. Suppliers, however, need greater agility in how they manage pricing and contracts.
Those that continue to treat pricing, quoting and contracting as isolated tasks risk watching margin erode quietly over time. Those that bring these processes together, supported by better data visibility and, where necessary, upgraded commercial systems, are better placed to make informed decisions, protect value and remain compliant and trusted partners to the health system. Volatility is not temporary, and commercial processes should reflect the conditions of today’s market, rather than those of the past.
