Repricing after the minimum wage rise: an April cost review

For employers, April is the month costs reset. The minimum wage changes, KiwiSaver contributions have been stepping up, many staff expect a pay review at the start of the tax year, and suppliers often time their increases to match. Businesses that reprice at the same time keep their margins intact. Those that wait until “things settle down” usually find the year’s profit has quietly shrunk.

What changed on 1 April 2026?

Change	Before	From 1 April 2026
Adult minimum wage	$23.50 an hour	$23.95 an hour
Starting-out and training minimum wage	$18.80 an hour	$19.16 an hour
Default KiwiSaver employee and employer contribution	3%	3.5%
Employer contributions for 16 and 17-year-olds	Not compulsory	3.5%, if other requirements are met

The KiwiSaver default rate is scheduled to rise again to 4% from 1 April 2028. Employees can apply for a temporary rate reduction to stay at 3% for between 3 and 12 months, and that also affects what the employer must contribute. MBIE estimates a full-time adult minimum wage worker earns about $936 more a year from the 2026 increase. More detail on both changes: minimum wage 2026 and KiwiSaver employer contributions.

Which of your costs actually move?

The headline change is the start of a chain:

1. Direct wages for staff on or near the minimum.
2. Relativities. A supervisor paid $26 an hour now sits only a couple of dollars above a new starter. Many employers lift rates above the minimum to keep the gap.
3. Holiday pay and public holidays, which follow wages.
4. KiwiSaver contributions, which rose as a percentage and are calculated on the higher wages.
5. ACC work levies, based on liable earnings.
6. Supplier prices, because your suppliers face the same changes.

A worked example

Illustrative example. A Wellington café employs staff for 420 hours a week. Before April, the average rate was $25.20 an hour. After the minimum wage change and a matching lift for experienced staff, the average is $25.85.

	Before	After
Weekly wages (420 hours)	$10,584	$10,857
KiwiSaver employer contribution (most staff enrolled; approx.)	$254	$323
Holiday pay accrual and ACC (approx. 10% of wages)	$1,058	$1,086
Weekly labour cost	$11,896	$12,266

Labour costs rise by about $370 a week, or around $19,200 a year. If the café’s weekly sales are $30,000 excluding GST, that’s an extra 1.2% of revenue. To hold the gross margin percentage where it was, the café needs average prices about 1.5 to 2% higher, depending on how much of its cost base is labour. Add any supplier increases and the right number is often 3 to 5%.

How do you work out the price rise you need?

For each main product or service:

1. Recalculate the cost of the labour, materials and on-costs that go into it.
2. Apply your target margin: price = new cost ÷ (1 − target margin). See margin vs markup.
3. Compare with the current price. The gap is the rise needed to hold your margin percentage.
4. Check the market. If competitors face the same costs, most will be moving too.

For service businesses, rebuild your hourly rate the same way; our charge-out rate page shows the full calculation.

Why hold the margin percentage, not the dollar profit?

If you add exactly the extra cost to each price, your dollar profit per sale stays the same but your margin percentage falls. Over time, as costs keep rising, the business needs ever more sales to earn the same profit, and the break-even point creeps up. Holding the percentage keeps the business in proportion.

What about fixed-price contracts that run past April?

Contracts and quotes signed before the April changes, for work delivered after them, need special care. A builder quoting in November for a job starting in May, or a cleaning company signing a two-year contract, is effectively guessing next year’s wage costs. A few protections help: shorter quote validity periods (30 or 60 days rather than open-ended), a clause allowing price review on 1 April for contracts longer than a year, and pricing multi-year work with the scheduled KiwiSaver step to 4% from 1 April 2028 already included. Where you can’t adjust, at least know which contracts will be less profitable after April, so the rest of your pricing can carry them.

When should prices change?

Ideally on or near 1 April, alongside the costs. That means doing the review in February or March, giving regular customers notice, and updating menus, price lists and quotes in time. Our piece on putting prices up covers notice and wording, and the feature on the April cost reset puts all of April’s changes on one page.

If the new costs arrive before the new prices

Even with good planning, there’s often a lag: costs rise on 1 April, but new prices take a month or two to flow through contracts and quotes. For larger employers, that gap can be significant. If you’d like a buffer to carry it, you can ask what’s possible without a credit check.

Protecting margin, then planning growth

Once your prices reflect this year’s costs, you can plan the year with confidence. If that plan includes more staff, equipment or a new site, talk to us about funding. We look at unsecured options for trading businesses and loans secured on residential or commercial property. Enquiring involves no credit check, your details aren’t shared out to other lenders, and a real person reads every enquiry. Please answer accurately so our first call can be specific. See if you qualify.