Do you know what pricing trends to expect in 2024?
As we begin the new year, it’s a good time to take a look at what’s been happening and where things are headed.
People often mistake pricing as a “one-and-done” activity. The reality is that if your prices aren’t changing, then you’re no longer aligned with the market. Meaning you’re under or over priced. The consequences of that are many, most remarkably lower sales and profits. Ouch!
That’s no way to start a new year.
To avoid finding yourself in this situation, take a step back and look at where things are in the world – in your market, in your business, and in your pricing. To help you with that, I’ve put together some research and my own insights to help you get started. Let’s kick the year off with a look at Pricing Trends for 2024.
In this Episode
In the past few years, we have seen a lot of fast-paced change.
As you consider your pricing strategy and what to do it’s good to take a look at where have things landed and what does it mean in terms of how people behave when they make purchases. That’s where we start our discussion, with a look at the “state of affairs”.
Then we turn towards upcoming trends in pricing, as an indication of what you might expect in the year to come. And last, my recommendations on what you might focus your attention to get ahead.
Enjoy the episode.
Podcast Episode Highlights
- 0:00 Intro
- 2:08 2024 Preview
- 5:27 Navigating Global Trends
- 8:34 Pricing Amidst Market Shifts
- 12:21 Beyond Price Wars
- 14:56 Pricing Trends
- 23:38 Strategic Pricing in 2024
- 26:37 Wrapping it Up
Favorite quotes about raising prices
“…for most industries, the market share, the size of the market is shrinking. Which has an impact on pricing.” Janene
“Wages in comparison to inflation (generally speaking) have not kept pace with inflation. They’ve fallen. Meaning people have less money to spend for things that are more expensive.” Janene
“If competition drops price people panic. Often because they have the assumption the lowest price always wins. But that’s not true. It’s the thinking most people have and it leads to price wars.” Janene
“Price wars are not good for anyone.” Janene
“If you can niche down and be exactly what this target customer group needs, and they feel that in your communication, they believe in that value that you’re bringing them specifically, then you can generally command better prices than the other guy. And even if it’s just that you communicate the value better. Then you’re going to already be in a better competitive position.” Janene
“Through that process of understanding the financial part of their business better, they’re making more intentional decisions about what to do with their pricing.” Janene
“You can never, ever, in my opinion, go wrong by refocusing on value.” Janene
NIQ 2023 Mid Year Outlook Survey: https://nielseniq.com/global/en/insights/analysis/2023/5-cost-of-living-trends-to-know/
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In today’s episode, we’re going to be talking about pricing trends for 2024. We’ll take a look at the state of affairs and what’s been happening and globally in the marketplace. Then we’ll take a look at what the trends in pricing are that I see coming this year and where I think you can benefit the most by focusing your attention for this year. Your pricing strategy may need adjustment so now’s a good time to have look.
Before we get into that, I want to share with you a few things that are happening in my business of what you can expect from me in 2024 because I am making some changes. First, each month this year, we’re going to focus on a different topic related to pricing and business or mindset.
This month, January, our focus topic, now this should be no surprise to any of you who follow me, but our focus topic is the customer. Why is it the customer? Because pricing is rooted in a deep understanding of customer. That’s right. If you follow me, you know that I say that all the time. It is absolutely true.
That is where we’re going to begin our journey in 2024. The next thing that I want to share with you is that we are replacing the web classes that I used to do with the Price Point Events Series. This is a live event that we’ll have a few times a year, and we’re going to be taking a look at those focus topics as well.
You can join these price point events where we’ll have live Q and A, maybe a little bit of coaching. Of course, you will get some content and some tips and tactics that you can use on those topics that we’ll be covering. The first one is this month. You will get a link in the show notes for that. Keep an eye out for it.
Masterclasses and Cohort Courses
Next, I will be conducting a few pop-up masterclasses this year. We’re going to take some of the lead magnets that I have, some of the guides and tools and downloadables that I have, and we’re going to dig into using them together in these pop-up masterclasses.
The first one is actually going to be in February and it is on the pricing toolkit. This is something I can only highly recommend you join me for, especially if you’re not big on the numbers or you don’t understand profit, you’re going to wanna join me for that, so be sure to look for that in the show notes as well.
Last thing I wanna let you know about is that I will be bringing you new and more cohort-based courses. Now, if you follow me, then you know that the FairPrice formula, which is my price setting course, I moved it last year to the Maven platform and now run it as a cohort-based course and has been absolutely amazing.
I’ve decided to move some other very prominent and let’s say important Courses over there. One of them is called the Customer Compass. This is all about doing customer insight interviews that will be running in the end of January.
We had the Fair Price Formula part one, which is the price setting. Then we have the Customer Compass coming up in February. The dates will be in the show notes. I’m also going to be bringing parts two and three of the fair price formula, which is price communication and managing prices out later this year. Be sure to keep an eye out for all of that. So that’s what I wanted to share with you on what to expect from me in 2024.
Navigating Global Trends
Now let’s get into the good stuff so that you can understand some of the trends and things that are happening across the globe and what it means for your business. I want to start this by talking about the state of affairs. Now, I’ve used a couple of reports to pull some figures and numbers in here.
You’ll find links to those in the show notes as well. Now, generally, if we’re looking across the globe, what we see is the following. We see people are spending more money, but they are buying less. Now, why is this the case? By less, I mean they’re purchasing fewer things, right? By paying more, spending more money, but buying fewer things.
And this is a really important trend because it means that for most industries, the market share, the size of the market is actually shrinking. So fewer people are making purchases. Yeah, because they’re buying less. They’re being more, let’s say discerning with what they purchase. Now because of inflation, mostly, is why they are actually spending more on what they do purchase.
Now what we’ve seen in the past couple of years is what we call compounded inflation. Because inflation itself has been quite high in many countries across the globe. What we see is that from 2021 to 2020, well, now we’re in 2024, at least through the end of 2023, we see that inflation has compounded and typically in many countries across the globe, people are paying 15 to 18% more for the goods and services that they were buying in 2021 than they are now.
And that is really important. That’s where that spending more typically comes from, because things have gotten, not everything and not everywhere, but things in general have gotten more expensive. And although inflation is higher, well, let’s say, let me put it this way. Although, you know, the, let’s say predictions.
Maybe not the right word. But the expectation for inflation is that it won’t be increasing as much. It still will probably, in many countries, be increasing 2-3%, and that is going to compound on top of the 15-18%. It will still feel, even though it’s not as big an increase compared to what we were paying before, it will still feel quite significant.
That is going to shift people’s behavior even further. Wages in comparison to inflation across the globe, and this is generally speaking as well, most of them have not kept pace with inflation. They have actually fallen comparatively. So that means that people have about, or a little bit less money to Spend for things that are much more expensive, which is why we see this trend of people purchasing fewer things, right?
Pricing Amidst Market Shifts
That’s to give you a background understanding. Now why is this so important to the topic of pricing? Well, as I said at the beginning, the market size has shrunk. And a lot of times what people do when they’re selling less is they panic and they say, let’s discount our prices so we can sell more.
In this case, it’s really hard to sell enough additional volume. Because you’ve got a couple things. You’ve got a very competitive environment and a shrieking environment, right? So everybody’s trying to hold on to their market share on the one hand and on the other hand, they’re trying to make sure that their profits are high enough and it just, you know, it has this really, I’m sorry, they’re trying to make sure that they’re not losing market share in a shrinking market that’s more competitive and that just leads to a lot of, let’s say, unhealthy pricing behavior and you want to be careful, that you don’t get into that trap as well.
Overall, we see less being purchased and a lot of people are paying more for those purchases. So what does this really mean? It means that people will probably continue to buy fewer things. Yeah, they’re going to be more discerning with what they spend their money on.
Insights from the NIQ 2023 Mid-Year Outlook Survey
One of the reports I’ll link to is called the NIQ 2023 mid-year Outlook Survey. One of the things that they did in this report is they kind of, they gave us an idea of what people are spending about the same on, more of their money on, or less of their money on. When they’re trying to decide, where to spend what money they have, these are the things that we’re seeing.
In general, people are spending about the same amount of money as they did before on things like, or maybe it’s not the same amount of money, but the same amount of their income, right? They’re spending about the same on things like health care visits on financial services on in home entertainment.
I’m guessing by in home entertainment that they mean things like, you know, live streaming and online gaming, things like that and transportation. That’s a good thing to think about. There’re people are spending a similar amount of their income on things like that. Now, people are spending less of their income on things like, let’s see, eating out, takeaways, out of house entertainment, so like going to the movies or going to a football game or something like that clothing, and home improvements and decor.
Yeah, so those things people generally are spending less of their, let’s say, disposable income on. And then the things that people tend to be spending more of their income on these days are fresh foods, health and wellness, utilities, savings and Investments are costing more, funnily enough, and Education.
Now why, why might I be sharing this with you? I find this really interesting because depending on what industry you’re in that could be really important information for you to know. If you’re in, let’s say, Gastronomy industry, you know, eating out and takeaway, you know, people are not doing that as much as they were before.
That means you may need to think about some other paths for your business, some other pricing strategies to entice people to come back. There’s lots of different ways that you can do that, but knowing that in your industry, this is sort of the trend that’s happening. That can be really helpful because it can help you understand what to be doing differently.
Beyond Price Wars
Another thing that the state of affairs, of affairs means is that some competitors are going to panic and drop their prices. And this has a couple of impacts. One, it’s going to be painful or at least appear to be painful for you.
Yeah, because we have this assumption that the lowest price always wins. It does not. But that is the assumption, the thinking that most people have. Your first response might be like, Oh my God, I have to drop my prices. I would sit on that overnight, think about it and make a decision a day or two later about it. Because what it can lead to is it can lead to price wars.
And price wars are actually not good for anybody. Not for you, not for your competitors and not for the customer. And you might find that odd for me to say, the reality is when the customer has fewer choices to choose or fewer options to choose from, then it’s actually not beneficial to them. That’s one thing.
Nurturing Brand Loyalty
The second thing is if they bought from you in the past but they switched to someone else and then you lower your prices and they lower their prices and you get into a price war, one or the both of you will end up going out of business. And then if the customer needs support from what, for what they bought from you, that option is no longer there.
You can see how it’s obviously not great for you or your competition because of profits and, and margins, but then it’s also not good for the customer. I think that people will be seeking more personalized experiences. Whether it be through a product or a software or service, I think they’re going to want to, They’re going to connect with and want to spend their money on things that feel more personalized towards them.
I think that that’s a trend that we’re definitely going to see. Of course, that will impact your pricing. You’ll also see Increased brand loyalty, but I have to caveat this to say as long as they feel is still good value for money. Yeah. So if people really love what you have to offer and they feel it’s still good value for money, then they will continue to be loyal to you and your brand because you’ve built that trust.
And as long as you maintain that trust, they will hold on for that. They will hold on to that, and that’s really important. Those are just some of the things that I think that we will see come out of the state of affairs that we’re having.
Now let’s talk about some of those trends in pricing, because these are really important to think about in the context of what is going to be happening in your market, but also what you want to be doing in your business.
The first thing, and I think many of you probably see this coming, but the use of AI. There’s no doubt that that is also coming into pricing. It already has in many ways. When we get into large multinationals or mid-sized businesses where they’re using a lot of data and analysis of numbers and figures, thousands of SKUs were Thousands of part members.
If you don’t know what an SKU is, then of course that’s already, you know started but for smaller businesses I see this trend of using AI as well and I see it in two areas. In one area is of course in doing your market research and understanding The Marketplace and The Competition. You probably have, you know, once or twice, I’m guessing you’d gone into something like ChatGDP and, and typed in there to see what would come out.
Now you have to be careful. Well, let me, before I get into that, let me say the other thing. Market research is one aspect where we use AI in pricing. Now, the other area where AI will come into pricing is when consumers are looking at what’s available to them, right? They may also be using AI to research pricing on different products and services and things like that.
Navigating AI in Pricing
What’s really important to understand that a lot of the AI tools that are available right now are not going to be giving you data that is up to date. For example, I even went in today and I typed something into ChatGPT to see what would come back to me.
I said, I typed something in there. If you’re looking at pricing trends and they came back to me and said all the information we can give you is only going to be updated up through 2022. They didn’t give me any information back except for to say, yeah, we can’t really give you any up-to-date pricing information.
That’s really important for you to know when you’re using it and for you to understand that when your customer is using it, they may be looking at older data, right? It’s important for you to consider that when you’re thinking about AI in your business. Does that mean its bad information? No, it just means that it’s not up to date information.
You have to figure out how can I take, if I use AI generated information, how can I take that and make sure it’s up to date when I do use it? Because you don’t want to base your pricing on outdated information if you can avoid doing so. As a result of using AI, especially of consumers using AI, and even your competition, right?
We will see more price transparency. Now, in some ways you can’t imagine probably prices being more transparent because it feels like they are pretty transparent already. But it will come even more so to the forefront and that will have an impact on your business. What does that mean you should do?
Well, I think for the most part you just need to be aware of who else is in the market both directed and indirect competitors and how they could be influencing what your customers or clients are seeing. I think we will see a Focus on differentiation. This is good news. Now, if you follow me, you know that I I’m a big proponent, especially for small businesses of differentiation.
If you can make yourself the expert or make your product, the perfect product for X, Y, and Z, You know, for this test target customer group, then you put yourself in a better position to be able to capture more value. Focus on differentiation and that can be done in many different ways. You can differentiate based on the customer experience, based on being a purpose driven business, based on the values of your business, based on sustainability.
There are lots of ways to differentiate. You can even differentiate by being a low price leader. I don’t generally recommend that, especially for small businesses. That’s another episode. But there are lots of ways to differentiate. The question for me and, or for you is, what are you going to differentiate yourself based upon?
Especially when we come to small, young businesses, the instinct is to do what I say is to cast a wide net and create a product or a service that anyone can benefit from. What most people find three to five years down the road in their business is that’s a really hard business model to work with.
Strategic Niche Focus
When you cast a wide net, you put yourself out there as a generalist, and then it’s really hard to connect on a strong level with anyone. So most small businesses, you’re going to be in a much better position. If you can Focus on a niche and meeting the needs of that target customer group. It doesn’t mean you won’t sell to others.
It just means that you can optimize a lot of what you do in your business for that one. Once you get some momentum there, then you can figure out how to serve and communicate with those other target groups. Focus on differentiation. This is along the same lines, kind of a follow up maybe, but I wrote it on here so I’m gonna, I’m gonna put it out there anyhow.
Niche to capture value. One of the fancy ways that we talk about price getting better prices is a value capture. So that’s a fancy way of saying I’m gonna get better prices. If you can niche down and be exactly what this target customer group needs, and they feel that in your communication, they believe in that value that you’re bringing them specifically, then you can generally command better prices than the other guy.
And even if it’s just that you communicate the value better. Then you’re going to already be in a better competitive position.
Strategic Adjustments and Intentional Decisions
I think that in 2024, we’re going to see people being much more intentional with price adjustments. And we may even see some businesses and many businesses make price adjustments mid-year. With the way that, you know, price has increased over the past couple of years and the way that businesses have adjusted, you know, some of them have, you know, left the prices the same, but changed the packaging.
Or they’ve restructured how their programs and offers look. It kind of exhausted some of that, and so it may be that they’ve feel it’s appropriate and it, you know, not just at the end of the year but midyear to make some press adjustments. And I think people are gonna be much more intentional. Intentional about what they do.
Why do I think that? I think because people are starting to understand because there’s such a pinch on finances, people are starting to understand better that what they do with their pricing, has a huge influence on their profitability. That seems like such an obvious thing.
If you’re a well let’s say if you understand profit in your business and if you understand pricing, this is going to seem. It’s so obvious, but I know a lot of people out there don’t. What I see is people are coming to me and saying, Janene, I need help to understand this better. Through that process of understanding the financial part of their business better, they’re making more intentional decisions about what to do with their pricing.
That is a trend that is definitely coming in this year.
The last thing I wanted to put in here as a price change is that people are going to be more strategic with discounts. Now, you know that unnecessary discounts, especially if you follow me, you already know this, are a nasty little habit that you have.
Whether it’s hard times or good times, I think you should always be very strategic with the discounts that you choose to give or not.
Why are people going to be more strategic? Well, first, remember at the very beginning, I said that the market is shrinking. There are fewer buyers out there.
That means that if you offer discounts, you’re probably not going to get as much volume as you think you will as a result of lowering those prices. So simply because the market is already shifting. You will see. less impact when you do offer discounts.
Let’s put it that way. Second, I think companies are aware or maybe even more aware that they can, based on their own discounting habits, create discount dependency with their customers. What do I mean by this? If you give discounts twice a year, once in June and once December every year, then, and do that repeatedly, then people will come to expect that from you and they will change their buying habits to adjust for that.
Maybe not for everything and maybe not for everyone, but you kind of train customers, okay, I should wait until June because then this will be on sale. You create a dependency on the discounts. I think people are going to be a bit more strategic with their discounts so they can avoid creating that dependency.
The last reason I think they’re going to be more strategic about their discounting is the negative impact it has on value. A lot of what I’ve talked about in the previous pricing trends with capturing more value by niching, focusing on differentiation, being more intentional, those are all, with your price adjustments, those are all value, let’s say buffering tactics and discounts can have a real negative impact on people’s perception of value. If you always said this is the price and this is what it’s worth and then you’re suddenly granting, you know, big discounts, then of course that’s going to call quite into people’s mind the question is the value really there?
You can destroy the value perception of your offer with poorly implemented discounting strategies. That’s another reason I think people are just going to be more strategic about what they choose to do when it comes to discounting. With all of that said, it all begs the question, Dear Janene, what should I do in 2024?
Well, I think on a very general level, because of course, without knowing anything about all about your business specifically, it’s hard for me to say, but you can never, ever, in my opinion, go wrong by refocusing on value. Refocusing on value, making sure that you understand the value and you can communicate it well.
Refocusing Your Business Strategy in 2024
What does that mean? Number one, you want to go back and talk to customers, do some more customer interviews, or if you have a large community, you can do some surveys, but find out what has changed and shifted for them in the past few years so that you know what they really value. And you can bring that into the context of what you choose to do with your pricing.
Second, figure out how you can adjust your value to match that. Right? So maybe you need to restructure your offer, refocus on value.
You’re going to go out there and talk to your customers. Then you’re going to figure out how to adjust the value. Now that can be adjust the packaging, adjust what you offer, when you offer it, how you offer it. It can also be just adjusting the communication. So sometimes you don’t need to change your offer.
You just need to focus on a different message that aligns with what’s important to the customer now. Of course, as long as that’s what you’re delivering along the way. I would say focus on boosting your own value communication skills. Being able to talk value without feeling like you’re defending, defending, defending all the time, being able to help customers think through the value without it feeling like you’re interrogating them.
How to talk about value, how to bring up the topic of value, how to have those conversations, one to one with customers, but then also how to communicate value on your website. If you know, that’s where they’re making the purchase. Talk to customers, adjust the value and hone those communication skills.
Wrapping it Up
That’s it for this episode of Live with The Pricing Lady, the podcast. It’s been my pleasure to have you here with me, and you will find lots of links in this episode in the show notes below. One thing I’d like to let you know. Is it, I have two courses coming up. I have the Fair Price Formula at the end of January and the Customer Custom Compass, sorry, coming up at the end of February.
So be sure to check the show notes for that. I would love to have you join me for those courses. Have a great day and as always, enjoy pricing everyone.