Pricing for Value Guide
In July 2020, the Victorian Government released the Pricing for Value Guide (the Guide). The Guide superseded the government’s Cost Recovery Guidelines. Based on 12 pricing principles and a practical methodology for undertaking pricing reviews, the Guide is intended to:
- assist departments and agencies to use pricing to recover the costs of regulating and delivering services. While cost recovery remains important, it is only one principle among a broader range
- inform how agencies can design their fee structures and regimes, while giving departments and agencies greater flexibility in setting their pricing structures, thereby encouraging innovation in setting pricing for products and service delivery
- improve consistency and capability in price-setting across government, aligning with current best practice and providing practical step-by-step guidance for undertaking pricing reviews.
Treasurers approval
The Standing Directions, issued by the Assistant Treasurer, under section 8 of the Financial Management Act 1994 require Victorian government agencies to apply the Guide when setting fees and charges for government services (including regulatory services).
For any proposed new prices or price changes that will have a revenue impact exceeding $500 000 a year indexed (currently $553 000 in 2024-25), agencies will require the Treasurer’s approval. In such cases, agencies should notify the Department of Treasury and Finance at least six months before the price changes are scheduled to take effect via: pricing@dtf.vic.gov.au.
Pricing reviews
The Guide will help agencies to assess the need for a pricing review to increase cost recovery, achieve sustainable funding, reduce costs, improve user experience and service quality, improve equity, and increase administrative simplicity. Key triggers for a pricing review include:
- when fee and/or charge regulations are approaching expiry
- earlier if there have been significant changes in circumstances (such as changes in demand, technology and/or work practices).
Pricing for value documents
Departments and agencies should use sections of the Guide that are most relevant to their needs.
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Provides a summary of the purpose of the Pricing for Value Guide, and a summary of the pricing principles and playbook. |
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Details the 12 pricing principles, their rationale, and examples of their application. |
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Outlines a step-by-step methodology for undertaking a pricing review. |
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Provides a one-page summary of the pricing guidance. |
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Frequently Asked Questions |
Fee relief during emergencies
Further guidance is also available regarding fee relief during emergencies. The following supplementary material to the Guide was approved by the Treasurer as guidelines under section 54U(1) of the Financial Management Act 1994. These guidelines apply to Victorian agencies subject to standing directions under the Financial Management Act, whether they are using general fee relief powers in Part 7C of that Act or specific fee relief provisions in other laws:
Cost Recovery Guidelines
The Pricing for Value Guide replaced the Cost Recovery Guidelines on 1 July 2020. Though superseded, the Cost Recovery Guidelines Provide useful advice for considering, developing and/or reviewing cost-recovery arrangements.