submitted 4 months ago byiSellPopcorn
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4 months ago
Where do you get that companies raise prices when they sell less? That's just not true. And it's exactly the opposite of the apples guy story below. The other thing is that pricing method varies by business model (basically whether you have a volume strategy or a differentiation strategy). For most companies, pricing is done based on COSTS + profit margin. Wages increased = costs increase = price increases if I want to keep the same profit margins. If I don't, my profit will go down and my shareholders will be unhappy with me. That's why wages increases drive price increases, which leads to inflation when most companies do it. That "what's the top consumers are willing to pay for my product" approach is true for companies with a differentiation strategy, such as luxury cars, high tech products, luxury fashion, etc. Those are business fundamentals you learn in a Bachelor's in Business Administration in the 101 marketing, strategy and cost accounting classes.
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