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Pricing and the Economy

Customer shopping habits reflect the state of the economy. During a
recession or depression, customers are at their most price conscious.
Worried about the high cost of living, threats of unemployment, and
cutbacks in credit, they want to make every dollar count. As the
economy improves, customers become more optimistic about the future
and are more willing to pay higher prices. When the economy is at its
peak and business is booming, customers offer little resistance to
rising prices. The general feeling is that there’s more money where
that came from.

As a business owner, your ability to recognize these fluctuations in
the economy and to adjust your prices accordingly adds to your
competitiveness. To keep your prices in line with customers’
expectations, you may add or drop products and services, raise or
lower quality standards, change your markups, or put together some
combination of these.