Survey predicts steep price hikes in 2024

Revenue Management Labs reports B2B firms in North America and Europe to exceed inflation with price rises

Survey predicts steep price hikes in 2024

Revenue Management Labs, renowned for its expertise in pricing consulting, has released its ‘2024 Executive Pricing Survey,’ highlighting a trend of aggressive price increases expected to continue through 2024 in North America and Europe.  

The survey indicates that large B2B companies are projecting price increases of an average of 6.33 percent in North America and 8.10 percent in Europe, eclipsing both the targeted and actual increases from the previous year, and significantly outpacing the projected inflation rates.   

“2024 is seen as a pivotal year for leveraging pricing as a critical lever for revenue growth,” explained Michael Stanisz, founder, and partner at Revenue Management Labs.  

In the wake of a tumultuous 2023, businesses are looking beyond cost offsetting, using price increases as a strategic tool for gross margin expansion. Additionally, companies are expected to balance the impact of these increases with enhanced discounting strategies.   

The survey's findings reveal that price increases are prevalent across all sectors, with the Consumer Goods industry leading the charge with an anticipated average increase of 10.08 percent. Business Services sectors are not far behind, expecting an 8.53 percent rise.  

Even the sector with the least expected increase, Manufacturing Service, plans for a 5.37 percent hike, still above the forecasted inflation rates.   

A notable insight from the survey is the aggressive pricing strategy of mid-sized companies, those with annual revenues between $500m and $1bn, which are increasing prices by an average of 9.5 percent.  

This strategy suggests a potential shift towards prioritizing price over volume, as these increases exceed their projected revenue growth for 2024. In contrast, both smaller and larger companies are expecting price increases that align more closely with their sales volume growth. 

Furthermore, the survey underscores the importance of dedicating resources to pricing. High-performing companies adopt best practices, including involving the C-suite in pricing decisions and conducting monthly pricing reviews.  

They also grant the sales team greater autonomy over pricing, invest in artificial intelligence, and machine learning, and maintain a dedicated pricing team. These practices are associated with meeting and surpassing targeted price increases.   

The backdrop to these findings is the OECD Inflation forecast for 2024, which predicts inflation rates of 2.9 percent for the Euro Area, 2.8 percent for the US, and 3.0 percent for Canada.  

This context highlights the substantial gap between the expected price increases and the projected inflation, emphasizing the strategic importance of pricing in the current economic landscape.