This year’s report highlights aggressive pricing increases fueling revenue growth and the key areas of focus for high performing companies.
TORONTO, ON: April 2, 2024 – Revenue Management Labs, a leader in pricing consulting, today released its second annual pricing survey, 2024 Executive Pricing Survey. The latest report found that aggressive price increases will continue to outpace projected inflation* for large B2B companies with an average of 6.33% in North America and 8.10% in Europe. The pricing targets increased from the 2023 targeted (5.68% in North America, 7.29% in Europe) and the actual 2023 price increases (5.21% in North America, 6.79% in Europe). Companies are expecting considerable gross margin expansion with pricing increases as a means to drive revenue growth.
“Pricing is viewed as key to driving revenue growth in 2024”, said Michael Stanisz, Revenue Management Labs Founder and Partner. “As companies recover from a volatile 2023, price increases are being used to expand gross margin rather than merely offsetting costs. As a cushion from increased pricing, companies are also increasing discounting.”
Price Increases Outpace Inflation across all Industries
The highest increase came in the Consumer Goods industry with an average target of 10.08% and Business Services came in second at 8.53%. The lowest targeted price increase still was higher than projected inflation in Manufacturing Service at 5.37%.
High Price Increases May be Masking Lower Sales Volumes for Mid-sized Companies
Mid-sized companies ($500M-$1B) were increasing their prices the most on average by 9.5% as compared to companies with annual revenue between $100M and $500M (5.9% average price increase), and large companies with over $1B+ in annual revenue (7.1% average price increase). For medium-sized companies, the anticipated net price increases for 2024 were greater that their predicted 2024 revenue growth, which indicates a potential sales volume loss. The reverse was true for small and large companies, indicated sales volume increases.
Meeting Targeted Price Increases is Associated with Dedicated Pricing Resources
Now more than ever, dedicating resources to pricing is key to driving revenue. From our survey, we found that high performing companies adopted pricing best practices, some of which include engaging the C-suite in pricing decisions, reviewing and monitoring pricing decisions on a monthly basis, giving sales team greater pricing autonomy, investing in artificial intelligence and machine learning, and having a dedicated pricing team.
Survey Methodology
Revenue Management Labs commissioned the survey in late 2023 of 520 senior decision-makers, VP and C-Suite, with verified knowledge of their company’s pricing strategy and financial performance and with an annual revenue of over $100 million.
*Note, we refer here to the OECD Inflation forecast for 2024, which are: Euro Area: 2.9%, U.S.: 2.8%, and Canada: 3.0%
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