Soumaya Keynes is right in her analysis that the eye-watering price rises of the past two years should not be dismissed as a normal response to market forces (“The ‘greedflation’ question: what have we learnt?”, Opinion, November 17).
While general price increases are natural over time, some companies have used inflation to hide much bigger hikes, raising prices to uncomfortably high levels in a bid to pump revenues.
Software is often the second-largest expense for many companies after payroll costs. In the $200bn “software as a service” market, we’ve seen opportunistic vendors raise prices far beyond general inflation, relying on complicated tech bundles and opaque pricing strategies to mask significant price increases. In the past 12 months, 73 per cent of vendors raised prices, leading to software inflation of more than double the level of the US consumer price index.
With the slowing of CPI announced recently, I am eager to see a knock-on effect on businesses that have been hit by rampant price increases over the last 24 months.
In the tech industry, we have started to see signs that businesses will no longer simply adopt price increases as a matter of course. Instead, they are increasingly choosing to consolidate applications and cut licences.
In 2024, I expect that we will see more modest increases as vendors find it less easy to hide behind general consumer inflation as a reason for raising prices. Businesses should remain watchful, but I am hopeful that the worst of “greedflation” is behind us.
Eldar Tuvey
Chief Executive and Founder, Vertice, London NW1, UK
