Here are 10 reasons why profit mongering is destructive to the livelihoods of every consumer, and why business executives should strive to maintain efficiency and offer the lowest possible prices.
Raising your prices means less consumers are able to afford to purchase your products, and the ones that can are forced to buy less of them. By lowering your costs, you influence word-of-mouth advertising and encourage an increase in sales. Many of the largest and most successful corporations in the world got there by offering a lower price than their competitors.
Expendable income is the driving force behind every economic market. Even markets that are considered “essential” are utilized less when consumers have less money available to spend. The higher prices get, the less products people can buy. Without money, people stop buying goods and services they want, and focus more on those that they need. When the prices of essential goods and services increases, people buy less of those too. This is devastating to a sustainable economy, and hurts every business across the board.
Increased sales: By taking slightly smaller profit margins companies can generate more sales and larger overall profits and success. By engaging more consumers in their marketplace, sales are driven upward, not only by the enticement of lower prices, but by a higher public awareness of your company or product as sales increase. This proven business model has sent several companies skyrocketing onto the Fortune 500 list.
Cost of living: by this I mean not just the cost for you to survive, but the cost of your entire lifestyle. People choose their lifestyle based on what they can afford. Price inflation increases the cost to maintain a particular lifestyle. The result is a downsizing. When companies decrease their prices, people are able to upsize their lifestyle and stimulate economic growth.
Wages: With increased prices, people require higher income. This is an exponential problem that can never be resolved, no matter how many times you raise your prices. The more expensive things become, the more income people require to be able to buy those things. Many of those people are the very ones you hire to produce your product or provide the services you sell. By not lowering your prices, you are hurting your consumers, you are hurting your employees, and you are hurting any other businesses that use your product or service as part of their operations.
Cost of Operations: Closely related to the previous point, raising prices results in higher labor costs and higher costs of products sourced from other companies. By lowering your prices you help decrease the demand for higher wages, and help other companies that use your product to lower their prices as well. This helps to increase sales while maintaining a trend of reduced operating costs, and stimulates economic growth.
Public Opinion of your business is an important factor governing your success or failure. To put it simply, if you are the company ripping everyone off and taking all their hard earned money, they view you as the ‘bad guys’. When you offer your product at a reduced cost to consumers: they like you, they view you as being “on their side”.
Taxes: By slightly decreasing your profit margins, you lower your tax liability. Often times this can result in larger net profits in the long run. Consult your financial department to find out if your current profit margin is costing you money in taxes because it is too high.
Competitive Marketing and Free Enterprise: By under-cutting the prices of your competitors you can take a large portion of your available market share. This encourages other companies to lower their prices as well and stimulates economic growth.
The Strength of the Dollar: How much you can buy with your dollar is the governing factor in deciding what you spend it on. The higher prices get, the more dollars you need to purchase the same goods or services, which means your dollar is worth less. By lowering the prices your business offers to its’ consumers you are helping to increase the value of the currency.
It is the responsibility of every business executive, small business owners, members of corporate boards, and voting shareholders to strive to maintain the lowest possible prices to consumers. Decreasing prices of goods and services is essential to a long-term sustainable economy, and leads to a better quality of life for everyone.