Businesses are going to charge customers as much as they believe they can get away with. Slightly increased labour costs has no meaningful effect on how much customers are able and willing to pay.
Still, these cheeseburger kulaks tries to make it sound like items are priced by cost of production. They know they’re taking the piss but they do it because they believe whining over labour costs will make customers more likely to accept price gouging.
Cost increase is sometimes the impetus for testing higher prices, but the market ultimately decides what you can get away with.
If you’re in a competitive market and raise your price $1/unit because your costs raised $1/unit, if the rest of the market stays the same, all that price increase does is lower your profits. You just have to eat that loss or find another way to increase your margins. If all the producers have the same cost increase and try the same price increase, you might get away with it, but it depends on how badly people want your product (demand elasticity).
If you’re selling something like overpriced, mediocre fast food, a lot of customers just won’t buy your shit anymore if you raise the price. You have to eat the loss or increase your margins some other way.
![[CW: meat] The horror. More people would buy more groceries, stay home and cook for themselves.](https://hexbear.net/pictrs/image/4b226b5d-403e-429a-aa2f-a359e564d54d.png){kind=link}
Businesses are going to charge customers as much as they believe they can get away with. Slightly increased labour costs has no meaningful effect on how much customers are able and willing to pay.
Still, these cheeseburger kulaks tries to make it sound like items are priced by cost of production. They know they’re taking the piss but they do it because they believe whining over labour costs will make customers more likely to accept price gouging.
The prices go up based on the price of production sometimes but never down.
Cost increase is sometimes the impetus for testing higher prices, but the market ultimately decides what you can get away with.
If you’re in a competitive market and raise your price $1/unit because your costs raised $1/unit, if the rest of the market stays the same, all that price increase does is lower your profits. You just have to eat that loss or find another way to increase your margins. If all the producers have the same cost increase and try the same price increase, you might get away with it, but it depends on how badly people want your product (demand elasticity).
If you’re selling something like overpriced, mediocre fast food, a lot of customers just won’t buy your shit anymore if you raise the price. You have to eat the loss or increase your margins some other way.
“Prices will be set as high as the consumer will pay” was literally in the first chapters of every Econ textbook I had in college.
But think of the owners, how are they going to buy this year’s brand new, exactly the same as the last one, death machine to drive through town???