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How expensive is a delayed cost escalator?
Quantify the gross-profit loss while input inflation runs ahead of contract repricing.
Example scenario
Editable demonstration inputs, not verified industry benchmarks. Enable JavaScript to calculate your own scenario.
- Annual contract revenue
- $3,000,000
- Affected cost as share of revenue
- 45 %
- Annual input-cost increase
- 12 %
- Months until repricing
- 6 months
- Cost increase recovered after repricing
- 80 %
First-year gross-profit erosion
Example result only, not a forecast or promise.
- Cost shock before recovery
- $162,000
- Loss during pricing lag
- $81,000
- Unrecovered after repricing
- $16,200
What to do with this result
Align escalation frequency and index choice with actual cost exposure; model the billing lag separately from eventual recovery.
Know what is inside the model.
Planning model, not personalized financial advice. Your inputs remain in your browser.
Calculation method
Annual unrecovered increase = affected cost × inflation × [lag / 12 + (1 − lag / 12) × (1 − recovery)].
Assumptions and limitations
- Example inputs are editable scenarios, not Aryo results or independently verified industry benchmarks.
- Contribution excludes fixed overhead, tax and financing; validate demand response before changing prices.