A new year has begun. Time to let go of last year's matters and look ahead. That's what January 1st is all about. Yet it's also a date that worries many people. A new year often means price increases. These are usually implemented under the guise of higher operating costs. Unfortunately, this is all too often accompanied by a vague explanation that makes no sense and only serves to make you swallow that price increase and boost revenue.
More Expensive Personnel
In a knowledge economy like ours, where labor hours account for by far the largest part of your costs, personnel costs are usually cited as the reason for a price increase. Labor is indeed not cheap and constitutes a significant part of the price you pay. As people work longer at a company, their wages increase, but on the other hand, people also leave (for retirement, for example) and are then replaced by inexperienced people. Moreover, experienced people are usually more efficient, so that shouldn't make the services or products you purchase more expensive.
More Service
How often have you heard that your supplier is coming up with 'new services' or 'an extended offering'? Admittedly, sometimes that's really the case and it's also really a reason to adjust prices. But you also often see that companies now explicitly mention something they've been doing for a while as a service and make you pay extra for it. The distinction may not always be clear to you as a customer, but in the latter case, in our view, there's no reason to raise prices.
New (and Better) Systems
Companies sometimes have to choose new systems. Perhaps they need different software because the current version is no longer supported or no longer fits in the future plans. Or maybe companies want to automate services and buy software or machines for that purpose. In most cases, this is mainly also a way to make fewer costs to sell you the same products or services. And then it's also no reason to raise prices.
In short, there are quite a few reasons that companies cite to raise prices. Sometimes that's justified, but there are many cases where it's not. Inflation is a good reason: when everything in general becomes more expensive, you usually have no choice but to raise your prices yourself.
But, we have good news. This year there is no inflation, so except for some commodity-sensitive products, there is no need for new price increases. If you hear from your suppliers that they are raising their prices, look at that very critically.