6 Companies That Raised Prices This Year

The Danger of Raising Prices

When times get tough, businesses generally have two options to improve their balance sheets: raise prices or cut costs. Throughout the recession and since, companies have tended toward the latter by trimming payrolls, freezing pay and making their operations as lean as possible, while staying away from significant price increases for fear of alienating customers. More recently though, many businesses – including some big-name retailers – have resorted to hiking prices as well. One survey released in August by Barlow Research Associates found that the majority of businesses (53%) with annual sales from $50 million to $500 million had raised prices during the previous 12 months, driven by the increasing costs of primary goods and services. Indeed, some very big-name retailers have hiked their prices to varying degrees, but in the process each risks alienating their customer base in the tough economy. “When households are faced with financial stress, loyalty to products diminishes and customers will do whatever is necessary to maintain their standard of living in a way that is financially responsible,” says Bernard Baumohl, chief economist at The Economic Outlook Group. “They will be willing to substitute, negotiate, see what competitors offer and postpone purchases on items.” Companies generally have an easier time raising prices if that increase is for essential products like food and shelter that consumers urgently need to buy, price notwithstanding, but according to Baumohl, jacking the price of non-essentials like flat-screen TVs and vacations comes with a greater risk that the consumer might simply choose not to shop. Even so, some companies feel this step is necessary to boost their profit margins. MainStreet picked out six major retailers that raised prices this year – and in some cases did so multiple times. Photo Credit: Andrea_44


Back to Top