How Well Are Your Earnings Keeping Up with Rising Costs?

Consumers in general have a perception that even with occasional merit and cost of living raises, income earned from jobs is not keeping up with the price increases of different types of goods and services. While this is true in many instances, most of us would be surprised to find out that we are actually devoting less of our monthly income to certain types of expenses. Here are some examples that may surprise you.

Thanks to innovations in technology, most of us are paying much less for basic telephone services than in years past. This includes both consumer and business telephony services that are used on a daily basis. With most residential customers, basic landline costs are usually buried underneath all the detail about additional features and services consumers choose to purchase. When it gets down to basic local service, people are generally paying anywhere from 25% to 40% less on average than they were for the same service in the 1980s.

Businesses that use teleconferencing services also pay much less to make a basic audio conference call

After the deregulation of the telecommunications industry in 1984, many independent conference bureaus offered options that called for flat fee for each line reserved, followed by a per minute long distance charge and then a per minute line usage fee. By the 1990s, simplified rate options essentially did away with the reservation fees and bundled long distance and line usage fees into a flat rate per minute per line. Today, it is not unusual for businesses to receive rates that are less than $0.05 USD per minute per line, even without committing to any type of volume usage contract.

The same phenomenon is found with electronics in general

Think about the cost of a portable CD player as recently as ten years ago, then compare the price with similar models today. Desktop computers are more robust in terms of memory and features than ever before, and are retailing for less than their counterparts at the turn of the century. Even household electronics like DVD players are much more affordable than in years past.

Businesses have also experienced shifts in costs when it comes to outsourcing various functions. In many areas, this is due to increased competition as more outsource providers seek to increase their market shares. For example, the typical payroll service offers more benefits to customers today than in years past, usually with no increase in the monthly bundled rate. This is especially helpful for small businesses, since owners can outsource financial functions such as invoice generation, and accounts payables and receivables along with those payroll services. The end result is a substantial savings for the small business, allowing more of the net income to be diverted back into growing the company.

Certainly, not all goods and services are less expensive than in years past

Many types of foods, oil and gasoline products, textiles, and other essentials have steadily increased in unit price over the years. While there is some debate regarding how much those rate increases have eroded purchasing power, there is no doubt that higher prices for certain products does impact home budgets and operating budgets alike. The key is to understand where those higher costs are actually occurring, identify areas in which expenses can be reduced, then make the necessary changes in order to maximize income. While this can be a challenging task, the end result is a better understanding of how shifts in the economy and the cost of living are actually affecting the model, and what needs to be done in order to make the most of the current situation.