Do you plan on adjusting your prices? A price index offers you precise data so that your price increase is in line with changes taking place in the Netherlands.
1. Choose a price index that suits your business
Statistics Netherlands publishes several price indexes. Frequently used indexes are the Consumer Price Index (CPI), Service Producer Price Index (SPPI), and Producer Price Index (PPI). Price indexes show how the prices of wages, products, and services in the Netherlands have changed per month, quarter or year.
Choose the index that suits your business activity best. By using the same index for every price adjustment, your customers will know how you set your prices.
2. Use base index figure or filters
When you open the table of a CBS price index, you will see the base index figure by default. The CPI, PPI, and SPPI are about all products, wages, or services within that index. The overall CPI figure shows, for example, how much households in the Netherlands spent on products and services. You can then filter within the price index by your spending category, service, or product. How you use the filters differs for each price index.
Combining price indexes
If several different factors determine your prices, you can combine several price indexes for your calculation. See step 5 for a calculation example.
3. Decide how often to adjust your selling price
You can adjust your prices regularly, meaning monthly, quarterly or annually. Or less frequently, for example, once every 5 years. This is up to you.
Choose a fixed period and mention this in your contracts or general terms and conditions. This will make it clear to your customers when you adjust your prices.
4. Include the CBS price index in your terms and conditions and contracts
Explain how you index your prices in your general terms and conditions or contracts.
For example:
- the name of the index and the reference year (for example: CPI, 2015 = 100)
- the moment of indexation
- how often you intend to adjust prices (monthly, quarterly or annually)
Read more about putting price changes in contracts (in Dutch).
5. Calculate your new selling price
Choose from these options:
Do you want to adjust your price monthly, quarterly or annually? Then follow these steps:
- Look in the price index of your choice for the price change compared to a month, quarter or year earlier.
- Take this number as a guideline for your price adjustment.
- Many entrepreneurs choose to adjust their prices annually. You do not have to calculate the price change yourself then. You can use the number in the table under 'annual change' (jaarmutatie).
Calculation example
You have a shoe shop and index your prices annually based on the CPI. In January 2021, the index figure was 92.9. In January 2022, you want to set your new prices. The CPI has risen to 96.1.
You calculate the price increase:
(new price index / old price index) x 100 - 100 = price change.
In this example, the price increase is: (96.1 / 92.9) x 100 - 100 = 3.4.
You increase your prices by 3.4%.
Would you like to adjust your price less frequently, for example once every 5 years? Then follow these steps:
- Check the price index of your choice to see how the price index has developed since your last price change.
- Take this change as a guideline for your price increase or decrease.
Calculation example
You import pet food. You adjust your prices once every 5 years based on the PPI. The last time was in 2017. In January 2017, the PPI was 98.9. In January 2022, the PPI is 103.4. Calculation:
(103.4 / 98.9) x 100 - 100 = 4.6
You increase your prices by 4.6%
You can also base your price adjustments on more than one price index. For example, because both staff wages and material prices determine your prices. You then use a weighting per price index. You decide how important each price index is for your price. The rule is that the weightings together always add up to 1.
For example, are you using 2 indexes with equal weighting? Then you weight both indexes by 0.5. If one index is more important than the other, you can also choose a different weighting distribution. For example, 0.75 and 0.25.
Calculation example
You have chosen to calculate your prices based on the CPI and DPI. Both price indexes carry equal weight. The last time you indexed your prices was in January 2020. At that time, the CPI was 107.5 and the DPI was 107.2. In January 2021, you want to calculate your new prices. Then the CPI is 110.4 and the DPI is 109.3. The price adjustment is:
((weighting 1 x new price index 1) + (weighting 2 x new price index 2)) / ((weighting 1 x old price index 1) + (weighting 2 x old price index 2)) x 100 - 100.
This becomes: ((0.5 x 110.4) + (0.5 x 109.3)) / ((0.5 x 107.5) + (0.5 x 107.2)) x 100 - 100 = 2.3
You increase your prices by 2.3%
6. Announce your price increase or decrease
Before implementing your new prices, announce when the price adjustments will take effect. You can announce this in writing or online. If you want to adjust your prices regularly, always use the same index and period. This way you are clear to your customers.
Take competition into account
Adjusting your prices can have a negative effect on your position in relation to competitors. For instance, if your competitor chooses not to raise prices, you may lose customers.