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The new financial year has arrived, bringing higher wages, faster super payments and another round of increasing business costs.

Because apparently running a small business was not already keeping everyone sufficiently entertained.

From 1 July 2026, minimum award wages increased by 4.75%. Pay Day Super has also begun, meaning employers must now pay super with each pay cycle rather than holding onto it for a quarterly payment.

These changes are positive for employees, but they also increase the cost and cash flow pressure of employing staff. If your wages and other expenses have increased but your prices have stayed exactly the same, your profit margin may be quietly disappearing.

A wage increase costs more than the hourly rate

When wages increase, the additional cost to your business is not limited to the amount appearing on an employee’s payslip.

Depending on your business and the employee’s entitlements, the flow-on costs may include:

• Superannuation
• Annual leave
• Personal leave
• Leave loading
• Overtime and penalty rates
• Workers compensation insurance
• Payroll tax
• Allowances and reimbursements
• Payroll processing and administration

That means a 4.75% increase to an award rate can result in a larger increase to your overall employment costs.

If you have several employees, even a relatively small hourly increase can add up quickly across every shift, every week and every pay cycle.

This is why making sure your payroll rates are correct is only the first step. You also need to understand what the changes mean for your overall business costs.

Pay Day Super changes your cash flow

Previously, many small businesses paid super quarterly. This allowed the cash to remain in the business for longer, although it was always money owed to employees and should never have been treated as available business funds.

Under Pay Day Super, super contributions must now be made with each pay cycle and generally reach the employee’s super fund within seven business days of payday.

Your total annual super expense may not suddenly look dramatically different, but the timing certainly does.

Businesses now need enough money available to cover:

• Net wages
• PAYG withholding
• Superannuation
• Other payroll obligations
• Everyday operating expenses

All within a much tighter timeframe.

If your customers routinely pay late, your invoicing is inconsistent or you are relying on next week’s sales to cover this week’s payroll, Pay Day Super may expose some uncomfortable cash flow gaps.

Ignoring those gaps will not make them less gap-like.

Your other expenses have probably increased too

Employment costs are only one part of the picture.

Many small businesses are also paying more for:

• Rent
• Insurance
• Electricity and utilities
• Software subscriptions
• Freight and delivery
• Materials and stock
• Professional services
• Finance and loan repayments
• ASIC registrations and annual reviews

Individually, each increase might not feel catastrophic. Together, they can take a very determined bite out of your profit.

If your costs have risen by 5%, 10% or more while your prices have remained unchanged, you may be doing the same amount of work, or even more work, for less profit.

Being busy does not automatically mean your business is financially healthy.

When did you last review your pricing?

We understand why business owners avoid increasing their prices.

You might be worried customers will leave, competitors will undercut you or you will need to justify the increase. So, you absorb the extra costs and tell yourself you will review your pricing later.

Later often turns into several years.

Meanwhile, your wages, super, insurance, software and supplier costs keep rising. Your margin gets smaller, your cash flow becomes tighter and you end up working harder just to stay in the same place.

A pricing review does not automatically mean applying one large increase to everything. It means understanding:

• What each product or service actually costs to deliver
• How much staff time is involved
• Whether all employment costs have been included
• Which services are profitable
• Which customers or jobs consistently use more resources than expected
• What profit margin the business needs to remain sustainable
• Whether your current prices still support that margin

Without this information, your pricing is based on hope, habit or what someone else charges. None of these are particularly reliable financial strategies.

Start with the true cost of employing each person

Before changing your prices, calculate the full cost of employing your team.

Do not stop at the hourly rate or annual salary. Include super, leave entitlements, workers compensation, payroll tax where applicable, equipment, software, training and other costs associated with the role.

You should also consider how much of each employee’s time can realistically be charged to customers or used to generate revenue. Employees still need time for meetings, administration, training and leave.

If you assume every paid hour is a billable hour, your calculations may look lovely, but they will not be especially useful.

Once you understand the full employment cost, you can calculate the revenue the role needs to generate and whether your current charge-out rate or pricing structure covers it.

What should small businesses do now?

You do not need to panic, sack the office plant or double every price by Friday.

You do need to look at the numbers.

Start by:

1. Confirming that all payroll rates and employee classifications are correct.
2. Checking that Pay Day Super is being processed correctly and on time.
3. Updating your cash flow forecast to include super with every pay cycle.
4. Comparing your current wages and overheads with last year’s costs.
5. Reviewing the gross profit margin for your main products or services.
6. Calculating the true cost of employing each team member.
7. Checking whether your pricing and charge-out rates still produce a sustainable profit.
8. Reviewing payment terms and following up overdue invoices promptly.

A small price adjustment made early can be much easier to manage than waiting until cash flow becomes a crisis.

Your prices need to support the business you have now

There is no prize for keeping your prices unchanged while every expense around you increases.

Your business needs to pay its employees correctly, meet its super obligations, cover its bills and provide a fair return for the time, risk and effort you put into running it.

That does not make you greedy. It makes your business sustainable.

If you are unsure what your services really cost, which parts of your business are profitable or whether your pricing still stacks up, we can help you work through the numbers.

Because “I think we’re making money” is not quite the same as knowing.