Which index should I use to revise the price of a service contract?

Use an official index published by the national statistics office or a professional body, linked to the main costs of the service, such as labour cost or a sector index. Avoid general indices if local law prohibits them.

Can a price revision clause only provide for increases?

It is legally risky. A clause that works only one way may be considered unbalanced or, in some countries, deemed unwritten. A symmetrical formula with a cap is safer.

What happens if the index used in the contract disappears?

Without a replacement mechanism, the parties must agree on a new index or ask a judge to do so. Providing for an official substitute index or a negotiated equivalent avoids this deadlock.

Clause templatesPayment

Price revision and indexation clause

This clause protects multi-year contracts against inflation and changes in input costs. It replaces a renegotiation each year with an objective mechanism: an official index, a formula and a revision date. A cap and a renegotiation trigger prevent excessive swings for either party.

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Clause template

1. The prices set out in [ANNEX] shall be revised once a year on [REVISION DATE], for the first time on [DATE]. 2. The revised price shall be calculated using the following formula: P1 = P0 x (I1 / I0), where P0 is the initial price, I0 is the value of [INDEX] published on [REFERENCE DATE] and I1 is the last value of that index published before the revision date. 3. The chosen index is published by [PUBLISHING BODY] and is directly related to the subject matter of the contract or the activity of one of the parties. 4. The revision may not result in a change of more than [PERCENTAGE] per year, upwards or downwards. 5. If the index ceases to be published, it shall be replaced by the index officially substituted for it or, failing that, by an equivalent index agreed between the parties. 6. If the combined change since the contract started exceeds [PERCENTAGE], either party may request a renegotiation of the prices in good faith.

Replace the bracketed items before use.

Variants

Fixed annual increase

The prices set out in [ANNEX] shall be increased automatically by [PERCENTAGE] on each anniversary of the contract, without further formality. Any other change in price requires a written amendment signed by both parties. Where the annual change in [INDEX] exceeds [PERCENTAGE] over the same period, either party may request a meeting to review the prices in good faith.

Composite formula

The revised price shall be calculated as P1 = P0 x [0.15 + 0.50 x (S1/S0) + 0.35 x (M1/M0)], where S is the labour cost index [INDEX] and M is the materials index [INDEX], with the fixed portion of 0.15 not subject to revision. The last values of each index published before the revision date shall apply, and the result shall be rounded to two decimal places.

When to use it

Service, maintenance or subscription contracts lasting more than a year
Supply contracts exposed to raw material, energy or exchange rate fluctuations
Commercial leases and long-term rentals
Public or private tenders with a long performance period

Mistakes to avoid

Choosing an index unrelated to the contract or the parties' activity
Writing a clause that only allows increases, which may be challenged as unbalanced
Failing to identify the reference index value, making the calculation disputed
Forgetting to provide for the disappearance or replacement of the index

Country-specific notes

France
Indexation on the general price level or on the minimum wage is prohibited, and the chosen index must be related to the subject matter of the contract or the activity of one of the parties.
Source: CCI Paris Île-de-France, Les clauses de variation de prix

Contracts that use this clause

Frequently asked questions

Use an official index published by the national statistics office or a professional body, linked to the main costs of the service, such as labour cost or a sector index. Avoid general indices if local law prohibits them.

Other Payment clauses

Sources

CCI Paris Île-de-France, price variation clauses

Indicative template, to adapt to your situation. It does not replace legal advice.

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Price revision and indexation clause

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Variants