The CPI clause nobody has used since 2019

Pull ten contracts at random from your book and read the pricing clause. I'd put money on at least six of them letting you raise the price every year, usually by CPI or RPI, sometimes with a floor or a cap. Now pull the invoices for the same ten customers. In most businesses I've looked at, the price on the invoice is the price the customer signed at.

Nobody decided to give that money away. It just never became anyone's job.

What it costs

Take a £20m ARR business where 60% of the book, £12m, sits on contracts with an indexation clause. Assume CPI of 3% a year, which is conservative for anyone who remembers 2022.

Skip the uplift for one year and you've lost £360,000. Skip it for three and the run-rate gap is £1.1m a year, with £2.2m lost in total along the way. That's from customers you already have, on terms they already agreed to, for a product that's already built. The cost of delivering it is spent. Almost every pound of it would have dropped to EBITDA.

And in 2022 and 2023, when UK CPI ran well above 3%, the gap opened much faster than that.

Why it doesn't happen

I've heard every reason. Here are the ones that come up most.

Nobody knows which contracts have the clause. It's in a PDF on a shared drive, written by someone who left. The CRM has a renewal date and a value. It doesn't have the indexation terms, the notice period or the reference index.

The account manager doesn't want the conversation. They're measured on renewal and they've got a decent relationship. A price rise feels like a risk to both. So they quietly don't send it, and nobody notices because nobody's checking.

Finance assumes sales will do it. Sales assumes finance will. Billing runs off the last invoice. The uplift needs someone to change the number, and that someone isn't defined.

It was waived once and became the norm. A big customer pushed back in 2020, the uplift was dropped to keep them sweet, and the habit spread.

Can you catch up?

Sometimes. It depends on the wording. A clause that says the price "shall" increase on each anniversary is a different thing from one that says you "may" increase it on giving 60 days' notice. If you missed the notice window, that year is usually gone. If the increase was automatic, there may be an argument for applying it now, though collecting arrears from a customer you want to keep is rarely the smart move. Get a lawyer to read the clauses before you write to anyone.

The bigger prize is forward. Every year you don't apply the clause, the base you'd apply it to next year is lower. Start this anniversary and you stop the gap getting wider.

Where to start

You don't need a system for this. You need a list.

Pull every live contract with a value above a threshold that makes sense for your business. Read the pricing clause in each. Record the index, the notice period, the anniversary date and any cap or floor.

Put the anniversaries on a calendar with a trigger 90 days ahead, so the notice goes out in time.

Make one person accountable for sending the notice. Not "the account team". A name.

Apply the uplift by default. If anyone wants to waive it, they need sign-off from someone who isn't measured on the renewal.

Report it monthly: uplifts due, applied, waived, and the value of each.

The first pass through the book takes a few weeks. After that, it's an hour a month.

The conversation

Most customers expect it. They've had the same clause applied by every other supplier they use, and they signed it. When I've seen uplift letters go out with a short note explaining the clause and the index figure, pushback has been rare. Where it does come, it's usually a request to talk, and that's an opening to discuss term length, new modules or moving onto your current terms. Which is a better conversation than the one you'd have had otherwise.

The clause is already in the contract. Somebody has to use it.

If you'd like to know how much your own book is leaving behind, take the Revenue Engine Check or read how contract monetisation works.