Manage and finance

Reduce business costs in New Caledonia: a step-by-step method

Higher electricity tariffs, a new minimum wage and a reformed consumption tax: a seven-step method to reduce business costs in New Caledonia without cutting what earns your margin.

By Benjamin Forte · 19 October 2026 · 6-minute read

The need to reduce business costs in New Caledonia is back at the top of the agenda in 2026. Regulated electricity tariffs rose by 10.28% on 1 October, the minimum wage went up on 1 August, and the reform of the TGC, the local consumption tax, has removed some deductions since July 2025.

The temptation is to ask every department for the same percentage of savings. It rarely works: you also cut what makes money. It is better to know where your margin comes from, target the few lines that really weigh, then track what has been achieved each month. Here is the method, step by step.

To reduce business costs in New Caledonia, start from the margin

Before touching a single expense, work out the gross margin by activity, product family or customer type: revenue minus direct costs (purchases, subcontracting, time spent). This answers the real question: where do you make money, and where do you lose it?

It also shows what an effort is worth. With a 30% margin, one franc saved on costs is worth as much as 3.3 francs of extra revenue. When demand is weak, that is often the quickest lever.

The calculation may also reveal that an entire activity is destroying margin. The decision is then no longer about savings but about strategy: raise prices, reorganise or stop. Conversely, a company selling both equipment and maintenance may find that maintenance earns most of its margin: cutting the technical team to save money would then be the worst possible decision.

The twenty lines that make up most of your spending

In most companies, around twenty suppliers and cost items account for most of the spending. This is the so-called 80/20 rule: check it against your own accounts rather than taking it for granted.

Extract the last twelve months of spending from your accounts, by supplier and by account.
Sort them by amount and keep the top twenty lines.
For each one, note the contract, its renewal date, when it was last put out to tender and who is responsible for it.
Sort them into three groups: renegotiate, consolidate or standardise, challenge.

This table fits on one page. It stops you spending weeks on small, visible items such as office supplies while large contracts roll over unexamined.

Energy, telecoms, insurance, rent: renegotiate what has changed

Electricity. The 10.28% rise on 1 October 2026 is described as the ‘third and final step of the tariff catch-up begun in 2024’. Tariffs will then be recalculated every quarter, up or down. The detailed grid by customer category had not been published when the rise was announced: check your October bill to see what has changed for you, then compare your subscribed capacity with your real needs, your air-conditioning hours and the condition of your refrigeration equipment.

Fuel. In September 2026, diesel prices rose by 5.9% in a single month, according to ISEE, the territory’s statistics institute, while consumer prices were up only 0.9% over the year. Delivery rounds, maintenance and fleet size deserve a review.

Telecoms and software. Unused lines, duplicate subscriptions, licences still assigned to people who have left: a simple inventory often yields savings without renegotiating anything.

Insurance and rent. Compare insured values with reality, and check excesses and overlapping cover. For your lease, reread the indexation clause and the space you actually use: a longer commitment can be traded for a revised rent.

Purchasing: consolidate, standardise, compete

Three moves cut purchasing costs without lowering quality:

Standardise: fewer product references for consumables, parts and equipment, so higher volumes per reference.
Consolidate: fewer suppliers, less frequent and better-prepared orders, and a contact who knows your annual volumes.
Compete: at each renewal of a major contract, get at least two comparable quotes against a written specification.

Being a good payer is also a bargaining chip. In 2024, 57% of New Caledonian companies paid their suppliers late, according to IEOM, the central bank for France’s Pacific territories. A customer who pays on time can ask for a discount or more flexible delivery terms. Finally, compare offers on total cost: price, freight, lead time, stock to carry and after-sales service. Group purchasing with other companies, for energy, insurance or consumables, extends the same logic.

Payroll: reorganise before you cut jobs

The SMG, New Caledonia’s statutory minimum wage, rose to 169,014 XPF gross a month, or 1,000.08 XPF an hour, on 1 August 2026. For jobs close to the minimum, payroll follows automatically.

Cutting jobs is expensive, in severance and lost skills, and weakens the recovery. Before going that far, look at where working time goes:

recurring overtime, a sign that the organisation needs reviewing;
data re-keyed between software packages that do not talk to each other;
tasks done twice, or by the wrong person;
temporary staff and subcontracting covering a permanent problem.

Reorganising, automating a re-keying task or training someone in a second role frees up time without losing know-how.

TGC: what the 2025 reform changed

The TGC reform that came into force on 1 July 2025 has a direct effect on costs. The summary sheet published by the DSF (Direction des services fiscaux, the tax office) highlights several changes:

TGC is no longer deductible on any passenger car, even one worth less than 3,000,000 XPF excl. tax, whether bought or leased (article Lp. 501-3 of the Tax Code);
related costs are also covered: spare parts, maintenance and repairs, fuel;
continuing vocational training, previously exempt, is now taxed at 6%.

For a company that recovers TGC, the tax paid on a company car and its fuel has therefore become a straight cost. This is a good moment to review your fleet: number of vehicles, actual use, and the type of vehicle suited to the job. The DSF stresses that its sheet is for guidance only: have your accountant confirm your situation before deciding.

Monthly cost tracking

A saving that is not tracked comes back within months. A one-page table, reviewed each month by the management team, is enough:

gross margin by activity, compared with the previous month and the budget;
the twenty spending lines, with savings achieved and those still to come;
the cost of your overdraft: at the average rate of 5.37% recorded by IEOM in the second quarter of 2026, an average overdraft of one million XPF costs about 53,700 XPF a year;
an owner and a date for every action.

Add a quarterly review timed to the electricity tariff revisions: it is the right moment to revisit the twenty lines and any contracts coming up for renewal.

This tracking is part of what we call managing performance. When the work goes beyond your team’s available time, a fixed-scope, fixed-price engagement lets us carry out the renegotiations and the reorganisation with you.

Key point

Reducing costs starts with the margin: target the twenty lines that weigh most, renegotiate what changed in 2025 and 2026, and track the savings achieved every month.

Frequently asked questions

Where should I start to reduce my company’s overheads?

With gross margin by activity, then a list of your twenty largest expenses over the last twelve months. These two tables show where to act first, before any across-the-board cuts.

Can TGC be recovered on a company car in New Caledonia?

Since 1 July 2025, TGC is no longer deductible on passenger cars, whatever their value, or on their running costs (parts, maintenance, repairs, fuel), according to the DSF. Ask your accountant to check how your vehicles are classified.

Will electricity tariffs keep rising?

The 10.28% rise on 1 October 2026 was announced as the last step of the catch-up begun in 2024. Tariffs are then recalculated each quarter and can go down as well as up.

Sources

Identify your potential savings

For SMEs of 15 to 49 people, CAP CROISIÈRE’s 72-hour diagnostic reviews costs, purchasing, tools and organisation over three days on site, for 324,000 XPF excl. tax. It ends with a documented figure for identified savings and a written action plan.

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