Much attention has been paid in recent months to the inquiries looking into the price setting practices of the major supermarkets, on the back of significant increases in the cost of groceries. While the spotlight is likely welcomed by many consumers, such significant price hikes are an issue being felt across many sectors currently.
It’s common knowledge that the cost of doing business has risen in the post-pandemic years, however it’s fair to say that some price hikes have left both businesses and consumers wondering whether the increases are fair, and/or justified.
While there are no doubt numerous sector-specific examples – some that are likely to resonate with many businesses across various industries are the cost of insurances, digital certification of some kind, and/or licences for operating software.
While the exact type and extent of insurances held by a business will differ, most companies are likely to have some form of workers compensation, public liability, office and/or vehicle insurance.
It’s a must-have, and while there may be a number of companies to choose from, it’s a cost that has consistently crept up – even without making a claim.
By way of example, our recent renewals for fleet vehicles and business travel insurance are up more than 25%, and the expectation is for other insurance premiums due later in the year to follow suite.
Digital certification is increasingly common, and within shipping and logistics the requirement is for businesses to purchase a Digital Certificate to communicate with cross-border transactions to the Federal Government’s Integrated Cargo System.
Certification is mandatory, and there is no alternative provider.
The cost of these Digital Certificates has risen again this year, with prices up between 14-22%.
The price of a two-year renewal has risen from $126 in 2015, to $439 in 2024 – an increase of almost 250% in nine years.
Separately, operating software has also risen significantly over the same period, with our business spending $10,000 on licensing in the 2014/15 financial year, to more than $150,000 for the current financial year.
It’s important, and fair, to acknowledge the various expansions, upgrades, and improvements of the software over that time, however there’s no getting around the fact that costs have increased more than 1000% in less than a decade.
Yes, you read that correctly.
While in this instance there is more than one provider we could choose, choices are still somewhat limited, and changing software can often be a difficult and costly process in itself.
In our increasingly digital world, such running costs are being worn by businesses globally, and while some can and are factored into prices paid by clients, the majority of ongoing increases are absorbed by the company.
Unfortunately for some smaller operators, I have no doubt they can simply no longer absorb such rises, and the cost of running their business just simply isn’t viable.
This is bad news for the wider economy, and ultimately, the consumer.
As a business, we know the value of being honest and transparent with our clients and stakeholders, and we encourage others to do the same, particularly around costs.
I think the average consumer understands that businesses need to be profitable, however without further information or context, there’s no way to know whether price increases are reasonable and justified, or whether they’re simply taking advantage of market conditions.
Whether the product in question is bread, milk, or a digital certificate, I think it’s a fair question to ask, at what point do price rises become unfair and unreasonable?
