Shrinkflation: How to Keep Profits Up Without Raising Prices

Welcome to this weeks’ episode of The Australian Small Business Show!

In this episode we’re discussing a new topic – shrinkflation. Shrinkflation is the strategy of reducing the size or scope of a product or service while keeping the price the same. It’s a strategy that has long been popular in big business, especially in times like this where the rising cost of doing business is really escalating.

Some examples you might have noticed as a consumer:

• Chocolate blocks shrinking from 250g to 200g.
• Toilet rolls with fewer sheets.
• Coffee bags that say “250g” but contain 200g.

Often unnoticed at first – it’s a stealth inflation strategy. But when people do notice, they do talk about it. So the key is subtlety and value alignment.

Why Shrinkflation Matters for Small Business Owners

Most small businesses are feeling the squeeze. Cost of materials has gone up. Labour is more expensive. Delivery, packaging, software – all up.

In this environment you’ve often got two options: raise prices or tweak your offer.

Shrinkflation gives you a third lever: adjust quantity or scope without jarring your customers.

Communicating Shrinkflation Without Damaging Trust

This is the line between strategy and “sneaky.” Be transparent when customers will notice quickly or compare, it gives you a chance to reinforce value (e.g., “we’ve streamlined the package to make it more focused”) or when quality has improved in another way (e.g., faster turnaround, better experience).

It’s not about tricking people – it’s about staying in business without pricing yourself out of the market. Be strategic. Be smart. And always keep value front and centre.

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* Disclaimer: The information shared on The Australian Small Business Show is general in nature and does not constitute professional advice, legal or otherwise. We recommend consulting with your advisors on your specific circumstances.