Have consumers noticed any change in the price/size of a product or service in the last year? Are they aware of the concept of shrinkflation? Which type of product has observed the highest surge? Are users trying to better manage their finances to deal with surge pricing? Read more to find answers to these and other similar questions.

No one would like to pay more for less, meaning that a reasonably aware consumer would not prefer paying more than they ideally should for a particular product. With current economic challenges at play and the inflation rate at a three-decade high, consumers might notice a surge in the price of a product/service and/or decrease in the product sizes. Is there consumer awareness regarding these changes?

Across all income groups it might be a situation of concern, but it’s likely to be even more challenging among lower-income consumers. To explore these aspects, Software Advice conducted an online survey gathering the participation of 1,007 respondents who are either solely in charge of paying home expenses and goods or are taking care of such expenses along with their partner or people they live with.

In order to evaluate their level of awareness, we asked them multiple questions, including which product they regularly use and which now has a difference in price, size, or availability, how did they first notice the price changes, if companies doing enough to combat this situation, and other similar questions. The full methodology can be found at the end of this article.

Have users noticed changes in prices of products/services?

In order to fully understand how aware consumers are about price changes, we asked them whether they have noticed any change in the price/size/availability of products or services in the last year. The responses we got are depicted in the chart below:

It is interesting to note that only 2% of the respondents didn’t notice any such changes. This data points out the fact that the majority of our participants are aware of these changes and typically tend to notice them.

93% consumers saw an increase in the price of groceries

Delving deeper, we left out these 2% of respondents who didn’t notice any change in the price/size/availability of products or services and asked the rest of our survey-takers (who said ‘yes’ to having noticed a change) to indicate the products they regularly use that are now different in terms of price, size, or availability. Here’s what they had to say:

• Out of the 88% of the respondents who noticed a price increase in a product and/or service, 93% noticed it in groceries
• 73% of them noticed an increase in the price of beauty and sanitary products (make-up, cosmetics, soaps, and shampoos)
• 63% saw a surge in the price of clothing
• 61% answered with medicine, and another 61% saw an increase in the price of sustainable products (fair-trade and bio/organic products)
• 60% noticed a spike in the price of electronics (laptops, TVs, smartphones, and tablets)
• 59% of the participants saw a rise in prices for domestic appliances

In terms of a decrease in the size of a product, out of the subset of respondents who noticed a decrease in product size and/or service scope, 71% observed a product size decrease in groceries, followed by beauty and sanitary products (34%), medicine (25%), sustainable products (24%), electronics (19%), domestic appliances (19%), and clothing (16%).

87% experienced a surge in the price of household bills

Moving forward, we asked those respondents who have noticed a service price increase and service scope and availability decrease to indicate the services they use in their daily life where they have experienced a change in price, scope, or availability. We recorded the following observations:

Clearly, as per the data, out of the 88% of the respondents who noticed a price increase in a product and/or service, 87% noticed it in household bills.

How did users first notice price increases in products/services?

We wanted to know the very first instance the respondents noticed the price surge. Therefore, we asked only those 88% of the respondents who noticed a price increase in a product and/or service about how they first noticed this increase. These are the responses we got:

Is there a change in company behaviour due to price surges?

Noticing that the majority of our respondents have noticed price increases in the past year, we asked the same set of participants as above whether they have noticed any changes in how companies communicate with customers when products and/or services are given a price increase. We received the following responses:

• 29% of the participants said yes, adding that ‘companies have increased the frequency of communication and have been more transparent in sharing updates and information’
• 27% said no, adding that ‘they’ve not noticed any significant changes’
• 21% answered in affirmative, stating that ‘the companies have increased the frequency of communication, but have been less transparent about their communication’
• 14% of them mentioned that ‘companies have reduced the frequency of communication and have been less transparent in their messaging’
• 5% said ‘they haven't noticed because they’re not in contact at all with brands/companies’
• The remaining 4% observed that ‘the companies have been more transparent but have reduced the frequency of their communication’

95% find it useful if companies communicate price increases personally

Additionally, we questioned surveyed respondents on how useful it would be if their preferred companies communicated a price increase of products and/or services to them personally (via email, newsletter, SMS, etc.). We asked them to rank their responses from 1 to 4, with 1 being ‘very useful’ and 4 being ‘not useful at all’. To this, we got the following results:

• A combined total of 95% of participants find it useful if companies communicate price increases personally, out of which:
  • 44% of the respondents rated their response ‘1’ and said it would be very useful if their preferred companies communicated a price increase of products and/or services to them personally
  • 36% answered with ‘2’, mentioning that it would be moderately useful
  • 15% of them rated it ‘3’, saying that it would be slightly useful
• The remaining 5% of the participants answered with ‘4’, indicating that it would not be useful at all

How do firms react to product size/service scope decrease?

Going forward, we questioned a specific set of consumers who have noticed a decrease in the product sizes or decline in the scope of services offered on how they would like their favourite companies to react to such changes. The responses we got are depicted in the chart below:

As the data indicates, out of the 25% of respondents who noticed product size decrease and service scope decrease, the majority of the consumers want their favourite companies to be more transparent with product/service changes (65%) and offer more discounts (63%). Keeping this in mind, businesses can perhaps take insights from this data and try and navigate and communicate price changes in a more transparent way to their customers.

What do users do if a preferred product/service is unavailable?

To understand how consumers would react in a particular situation, we asked those specific set of respondents (17%) who have noticed availability change in a product or service their typical response to a particular item being unavailable. We recorded the following answers:

• 57% of the respondents said ‘they would purchase an alternative product/service from a different company, but keep looking for the one they wanted originally’
• 36% of them said ‘they would purchase an alternative product/service from a different company, and stop looking for the one they wanted originally’
• 5% mentioned that ‘they would stop looking for this type of product/service as it is not essential for them’

Are companies helping users manage price surges?

We asked those respondents who have noticed product and service price change in the past year their opinion on whether companies are making an effort to help customers manage this surge. The response to this is depicted in the chart below:

As per our findings above, some respondents (38%) feel that the companies are not trying to help them manage price surges. Businesses can take note of these and try and help consumers in a better way. For instance, they can be clear about any price change, update their sales and promotional materials, try and give their customers notice in advance, work on the best way to effectively communicate with them, logically explain the reasoning behind such changes and allowing consumers to reach out with any further questions/concerns.

How can price changes influence customers’ buying decisions?

As per the Australian Competition and Consumer Commission, ‘businesses must not mislead consumers about what they'll be charged or why’. In addition, the same guidance also mentions that ‘businesses must set prices independently of their competitors and it’s illegal for businesses to agree on prices among themselves or engage in other anti-competitive pricing behaviour’. 

Having said that, sudden price fluctuations in products or services can influence a customer’s buying behaviour. While it might seem unfair, price increases due to factors such as inflation, recession, and demand and supply disruption cannot be considered irrational or illegal. Businesses should ideally be transparent about price changes and ensure full compliance with any regulatory pricing laws. In addition, not revealing the reality of such changes clearly to the customers might be unethical and could potentially pose challenges for the brand.