Why inflation matters to a first-time founder
Rising input costs, wages and customer prices can change margins even when unit sales stay flat. Cash forecasts and long contracts built from old prices may become unreliable. Founders should separate general inflation from company-specific cost changes and should not assume every price can rise without affecting demand.
Examples of inflation
A company charges €100 monthly and spends €60 serving each account. A year later, its relevant costs rise 8% to €64.80 while price stays fixed, reducing contribution from €40 to €35.20. The founder tests a price increase rather than claiming the whole 8% reflects every customer’s experience.
Common misunderstanding
It is not simply one product becoming more expensive. Inflation describes a broad change measured across a basket of goods and services. A lower inflation rate means prices are generally rising more slowly, not necessarily falling; a broad fall in the price level is deflation.
When to use it
Include realistic price and wage assumptions in budgets, runway models and multi-year contracts. Review the measures most relevant to your customers and inputs rather than relying on one headline rate. Use scenario ranges, and avoid presenting a forecast as certain when future inflation is unknown.