According to PORDATA, Portugal's minimum wage was 870 euros in 2025 and rose to 920 euros in 2026. That is 50 euros more per person per month, before employer social contributions. Inflation in 2025 was 2.3%, again according to PORDATA. If a significant share of your team is paid close to the minimum wage and you have not touched your prices, your margin has already changed, whether or not you have done the maths.
Over my years of coaching, I often see business owners put off a price review for fear of losing customers. The result is usually the worst of both worlds: costs go up, prices stay the same and the company works harder to earn less. Reviewing prices is not an act of courage. It is a calculation.
First, measure the real impact
Before changing any prices, you need to know what the increase has actually cost you. The exercise is simple and should take no more than an afternoon:
- List the team members whose pay was affected by the update, directly or indirectly (those just above the minimum are usually adjusted too).
- Work out the total monthly increase, including employer contributions, and multiply it by the number of salary payments in the year.
- Add any other costs that rose over the same period: suppliers, energy, rent.
- Divide the total by your forecast annual revenue. That figure is the share of revenue your margin has lost if nothing changes.
Picture a hypothetical restaurant business with 10 staff, all close to the minimum wage, turning over 600 thousand euros a year. A gross increase of 50 euros per person, before contributions, comes to 500 euros a month. Once contributions and the number of annual payments are factored in, the yearly impact easily exceeds 7 thousand euros. If that business runs at a 5% net margin, or 30 thousand euros, the increase eats more than a quarter of its profit. That is why this calculation cannot be done by eye.
Margin is one of the 5 Ways, not a leftover
At ActionCOACH we work with the 5 Ways to increase profit: number of leads, conversion rate, number of transactions per customer, average sale value and margin. Many owners treat margin as whatever is left at the end of the year. It is the other way round: margin is a decision, made every day through pricing, product mix and cost control.
The economic backdrop matters too. According to PORDATA, labour productivity in Portugal was 47.7 thousand euros per worker in 2024, the 19th lowest in the EU. When labour costs rise faster than productivity, margin can only be protected in two ways: price or efficiency. For most SMEs, the right answer is a combination of both.
How to review prices without losing the right customers
Segment before you raise
A flat increase for everyone is the easiest option and the least intelligent. Group your customers by margin and by loyalty. Customers who buy regularly and value the service accept a justified increase far more readily. Customers who buy purely on price and demand discounts are often the ones who contribute least to profit.
Review what you sell, not just the price
Raising average sale value does not always mean raising the price list. It can come from bundles, add-on services or dropping products that create work and little margin. It is worth testing: removing the least profitable lines can free up more margin than a blanket increase.
Communicate early and give reasons
Customers react worse to surprise than to the increase itself. Clear communication, given in advance with a simple explanation (staff costs, inflation, maintaining quality), reduces resistance. You do not need to apologise; you need to be transparent.
Protect cash flow at the same time
According to Informa D&B's Payment Behaviour study (2026), only 20.2% of companies in Portugal pay within agreed terms, and in hospitality the average delay is 30 days, with only 11% paying on time. Reviewing prices without reviewing payment terms solves half the problem. Use the review of terms to shorten payment periods or ask new customers for deposits.
Efficiency: the other half of the answer
According to INE, average unemployment in Portugal was 6.0% in 2025, the lowest since 2011. In a tight labour market, the answer is not to pay less but to get more value from every hour worked. Three practical questions:
- Which repetitive tasks does the team do every week that could be simplified or automated?
- Where are hours lost to rework, waiting or missing information?
- Which productivity indicator (revenue per person, units per hour, customers served per shift) do you track today? If none, start with one.
Your action for this week
This week, do the calculation from the first section: how much did the move from an 870-euro to a 920-euro minimum wage cost your company per year, including contributions and the adjustments you made for staff just above the minimum? Then divide that figure by last year's net profit. If the result surprises you, you have your priority for the next 90 days.
If you would like to review prices, margins and cash flow methodically, the ActionCOACH Porto team can help, for example through 1:1 Coaching or the 90-Day Planning Workshop. A first conversation is a chance to look at your numbers together and decide where to start.