Supplier price increases: what are they really costing you?

Why supplier price rises are so easy to miss

• They're small. A 6% rise on something you buy every week doesn't stand out on any one bill.
• They're spread out. Five suppliers each nudging a few items adds up to real money, but no single bill looks wrong.
• They hide in new lines. Fuel levies, delivery fees, card surcharges and small-order fees appear as their own lines, so the item price looks unchanged.
• Pack sizes change. The price stays the same but the box gets smaller, or the description stays the same and the box gets bigger.
• Your accounts show spend, not prices. Your accounting software tells you how much you spent with a supplier, not what the same item cost a year ago.

How to check your own bills

1. List your ten biggest suppliers by spend over the last year. That's where most of the money is.
2. For each one, find a bill from about a year ago and a recent one with the same items on them.
3. Compare the unit price, not the line total, and compare it before GST. A bigger order isn't a price rise.
4. Look for lines that weren't there before: surcharges, levies, fees and minimum-order charges.
5. Multiply each change by roughly how many you buy in a year. That's the number that matters.

Doing this properly for every item is slow, which is why most businesses never do it. Our free calculator handles the maths for a few items, and Billflation does every item on every bill automatically.

What counts as a real price rise

Not every change on a bill is a supplier charging more for the same thing. Before you call a supplier, rule these out:

• Usage, not price. Electricity, phone and similar bills change with how much you use. A bigger bill isn't a higher rate.
• A different item. A new pack size, grade or brand under a similar description.
• The exchange rate. If a supplier bills in US dollars, a weaker Australian dollar raises your cost even when their price hasn't moved.
• Market prices. Some goods, like fresh produce, move with the market every week. Watch the trend rather than one bill.

What to do about it

• Ask, with numbers. A short, polite email that lists the items, the old and new prices and the dates is hard to brush off.
• Ask for last year's price, or a volume deal. Many suppliers have room to move for regular customers who ask.
• Get a second quote. Even if you don't switch, a competing quote is the strongest thing you can bring to the conversation.
• Check your agreement. If you have a contract or a quote, see whether it allows price changes and how much notice is required.
• Order differently. Fewer, larger orders can remove delivery and small-order fees.

How Billflation does it

Billflation connects to Xero with read-only access, reads 25 months of supplier bills, and matches the same item from the same supplier a year apart. It works out the typical price then and now, multiplies the change by how much you bought, and adds it up into one number, with the two bills behind every rise.

Usage-based bills, possible pack-size changes and close matches are shown separately and left out of the total, so the number you see is one you can act on.