The contract indexes to CPI. Two thirds of your costs are wages.

Index-linked pricing feels like inflation protection. Whether it actually is depends on how closely the index resembles your cost base, and usually it doesn't.

By Steve 5 min read
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An annual uplift clause is one of the few pieces of commercial hygiene most firms get right. Multi-year contract, price rises each year in line with a published index, no awkward conversation required. It looks like the inflation problem has been solved and delegated to a statistical agency. It hasn’t. An index clause protects margin only to the extent that the index tracks the specific costs that firm actually incurs. For most service businesses it doesn’t, and the gap compounds quietly for the full term of the agreement: which is…

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Important: General information only. Rialto Bridge articles describe patterns and considerations that may apply to a business; they are not financial, legal, tax or accounting advice, and they take no account of your particular circumstances. Consider your own situation and seek advice from a qualified professional before acting.

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