The Art of Pricing Power

Podcast Summary

• Improve communication skills with the Think Fast, Talk Smart podcast: Learn effective communication skills from experts and stay informed about business trends to achieve personal and financial growth

  Effective communication skills are essential in business and life, and the Think Fast, Talk Smart podcast can help individuals hone these skills. The podcast, which has received nearly 43 million downloads and is the number one career podcast in 95 plus countries, offers valuable insights from experts on various communication topics, including managing anxiety, taking risks, and harnessing nervous energy. Meanwhile, companies like Amazon and Costco, which have a proven track record of rewarding shareholders, are expected to raise their membership fees, making it crucial for investors to maintain a long-term perspective. These price increases are likely due to inflation and the companies' consistent track records and loyal followings. Despite the potential fee increases, members continue to renew their memberships due to the perceived value they receive from these companies. Overall, investing in communication skills and staying informed about business trends can lead to personal and financial growth.

• Balancing Membership Fee Increases for Amazon Prime and Costco: Companies must weigh benefits, competition, and consumer sentiment before raising membership fees to maintain value and profitability.

  Both Amazon and Costco face the challenge of finding the right balance when it comes to raising membership fees for their Prime and membership programs, respectively. While there are benefits such as access to TV shows, Whole Foods delivery, and audiobook deals for Amazon Prime members, or discounted gas and bulk items for Costco members, there is a limit to how much consumers are willing to pay before they consider switching to a competitor. Companies need to carefully consider the value they provide to members, the competitive landscape, and the potential for consumer backlash before making a price increase. Additionally, the membership fees act as a gateway to increased spending on each platform, making the math of determining worthiness a bit more complex for consumers. Ultimately, both Amazon and Costco aim to offer the best value to their consumers while also increasing profitability.

• The value consumers place on goods and services affects their willingness to pay: Consumers are more willing to pay more for luxury goods and services, while being more price-sensitive for necessities. Companies offering a range of goods can impact consumers' price perception, and initial pricing can signal future pricing strategies.

  The perceived value and necessity of different goods and services influence consumers' willingness to pay for them, even if the price increases. For example, people may not mind paying a little more for entertainment services like Netflix or Spotify because they see them as luxuries, while they might be more price-sensitive when it comes to necessities like groceries or household items. Companies like Costco and Amazon offer a wide range of goods, from essentials to luxury items, which can impact consumers' mental math and price sensitivity. Additionally, the initial price point set by a business can give investors an indication of its intentions and pricing strategy over time. Companies like Apple and Disney Plus initially priced their streaming services low to attract a large customer base and then gradually increased the prices as they built up their content offerings.

• Consumer forgetfulness with low-priced subscriptions: Low-priced subscriptions can lead to forgetful renewals and increased revenue for companies, while higher-priced services require more commitment. Consumers are seeking less meat options and companies are testing plant-based offerings, potentially impacting negotiations with beef producers.

  The low price point of streaming services plays a significant role in consumer behavior, leading to forgetful subscriptions. The speaker shared an experience of accidentally paying for a Stars Plus subscription for months due to its low cost. This "forgetting mentality" is common with low-priced subscriptions, while higher-priced services like Netflix require more commitment. Additionally, companies like Amazon and Costco are expected to continue increasing membership fees, while McDonald's expanding its partnership with Beyond Meat could potentially give them more negotiating power with beef producers. The speaker also mentioned the growing trend of consumers seeking less meat options and the testing of plant-based offerings by fast food chains. Overall, understanding consumer behavior and market trends in the streaming and food industries is crucial for investors.

• New investment opportunities in plant-based food industry: Consider Shift4 Payments, a payment processor offering more than just payment services in the growing plant-based food industry.

  The plant-based food industry is becoming increasingly competitive, with Beyond Meat and Impossible Foods leading the charge. However, the excitement around these companies may not translate into significant investment opportunities, as larger corporations may eventually buy out these niche players for their plant-based divisions. Shift4 Payments, a payment processor and software as a service company targeting specific industries, particularly the restaurant business, is a relatively new public company that investors might want to consider. While it flies under Wall Street's radar, it's a significant competitor in the payment processing space, offering more than just payment processing services.

• Shift4's focus on the restaurant industry and comprehensive solution: Shift4, a tech company specializing in payment processing, targets the $1.1 trillion restaurant market with a comprehensive solution including hardware, software, and services, aiming to expand into new verticals.

  Shift4 is a technology company specializing in payment processing and operating systems for various industries, with a significant focus on the restaurant business. They offer a comprehensive solution that includes payment processing, software systems, and hardware, setting them apart from competitors. Their current market opportunity is estimated to be around $1.1 trillion in annualized payment volume, with plans to expand into new verticals such as non-profits, healthcare, and technology. With a large and growing market opportunity and a strong leadership team, Shift4 has the potential to significantly grow its business and market share.

• Shift4 Payments: Proven Success in Restaurant and Hospitality Markets: Shift4 Payments, led by a passionate founder CEO, has shown significant success in the restaurant and hospitality markets with a large addressable market and room for growth, but faces execution risk in potential diversification. Despite stock struggles, its focus on specific markets and proven success sets it apart from other fintech names.

  Shift4 Payments, led by young and passionate founder CEO Jared Isaac, has shown significant success in the restaurant and hospitality markets, with a large addressable market and room for growth. However, there is execution risk involved in potential diversification into new markets. Despite the company's strong performance and growing top line, the stock has suffered in the last 12 months. Investors may see it as just another fintech name to wait on, but the differentiation lies in Shift4's focus on specific markets and proven success within them. The leadership's strong investment and alignment with shareholders adds to the appeal.

• Shift4's impressive growth in payment volume: Shift4, a payment tech company, has seen a 37% annualized growth rate in payment volume over 5 years, with a 52% increase in restaurant business since 2017. Major companies like T-Mobile Arena, Caesars, and Hilton use Shift4, signaling its potential for attracting small and large customers.

  Shift4, a payment technology company, has experienced impressive growth in payment volume over the past 5 years, with an annualized rate of 37%, surpassing industry giants like Square, PayPal, Visa, and MasterCard. This growth rate is even more significant when focusing on their core restaurant business, which has seen a 52% increase in payment volume since 2017. The adoption of Shift4 by major companies like T-Mobile Arena, Caesars, and Hilton further validates the platform's use case and potential for attracting both small and large customers. This growth trend is worth keeping an eye on as it could lead to significant expansion for the company.