It’s hidden. Unnoticed. Out of sight, and out of mind.
It disguises itself to look very similar to the previous month.
You don’t know when it started. You don’t know how big it’s got. And the devil’s in the detail so your office/IT manager won’t have noticed either.
So it continues. Unchallenged.
What is it?
Pｒｉｃｅ ｃｒｅｅｐ．
Price creep is the gradual increase in the price of an item or service that doesn’t have a legitimate explanation. Many suppliers use price creep as a surreptitious strategy to boost revenue. Your company may even do it to your clients!
Item prices creep up or discounts marginally reduce. Minor ancillary service charges may be added or infrequently-ordered products prices may rise significantly (a favourite of stationery suppliers). And it slowly chips away at your bottom line.
I’m not talking about scheduled annual price increases, agreed contract changes and inflation. These can all result in higher prices, but they’re different.
Price creep examples I’ve identified for clients include:
Increasing international call charges.
Adding an administration charge.
Reducing discounts on infrequently ordered stationery products.
Not reducing fuel surcharges.
Adding postage data input charges.
Added Congestion Charge.
Increasing minimum invoice charge.
I’ve helped many clients identify hidden price creep and more often than not, it’s a complete surprise to everyone. That’s because it’s not supposed to be noticed! No-one sees it happening because it’s not a pre-notified and substantiated price increase and clients commonly make the assumption that they are getting ‘good enough’ deals with their chosen suppliers. And let’s be honest, office and IT managers simply don’t have time to go through supplier invoicing in such detail. If the monthly invoices look about right then they simply get passed for payment.
If you feel that you don’t have the time or internal staff resources to forensically audit for these cash leaks, maybe I can help. I work off-site on a no savings, no charge guarantee. There are no up-front fees and you pay me a minor percentage after the savings are achieved, which makes me self-funding.
Please get in touch if you’d like an exploratory chat.