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